Insurance and liability requirements are among the many complex issues that your commercial lease will address. Negotiating lease terms for New York City office space is the primary responsibility of your attorney. But Metro Manhattan Office Space, an experienced commercial real estate tenant representative broker, helps tenants understand the basic insurance and liability protections that should be included, and works in cooperation with attorneys during lease term negotiations.
What is Commercial Liability Insurance?
Liability insurance protects insured parties from liability in third-party claims concerning personal injury or property damage.
New York City landlords require their tenants to have liability insurance. Commercial tenants are not permitted to take possession of leased space until their insurance policy is effective. Prior to assuming occupancy of a commercial space, a tenant must provide their landlord with a certificate of insurance and copies of their insurance policy.
New tenants must obtain and keep in full-force and affect a commercial general liability insurance policy, which includes bodily injury, personal injury and property damage coverage. This policy must also have a broad form contractual liability endorsement naming the tenant as insured and protecting the landlord, the landlord’s employees and the managing agent as additionally insured. In addition, any mortgagees or lessors who have an interest in the building should be listed as protected from liability.
The amount and scope of the insurance policy is determined by the size of the space, the type of business that will occupy it, and the financial strength of the relevant party.
Commercial liability insurance is required because the landlord and his or her respective parties are at risk for claims by third parties arising out of the acts of a tenant or a tenant’s invitees. Most commercial leases provide that the tenant must indemnify the landlord for any such acts and that the tenant is expected to look to insurance for the appropriate recovery.
Tenants should be aware, however, that they also deserve similar protections in a lease agreement. Tenants should be held liable for damages caused by the landlord or the landlord’s invitees in the surrounding portions of the building, assuming the tenant is not leasing the entire space owned by the landlord.
In general, it is important that a tenant enter a fair lease with adequate protection for both landlord and tenant. Signing a landlord lease form that is not properly negotiated can have detrimental impacts on a tenant’s business and financial liability. Landlords should be required to waive any liability of tenant for third-party claims that took place on the property not being leased by tenant, particularly if the tenant is paying for a portion of the landlord’s property insurance as part of its operating expenses.
As a broker who only works for and on behalf of tenants, Metro Manhattan Office Space helps guide tenants through the process of purchasing insurance for a rented commercial property. We work as a Manhattan commercial tenant representative and help tenants understand their liability, and always have a tenant’s rights in mind.
With Metro Manhattan Office Space, finding your ideal commercial real estate is only the first step. We then help ensure that all of your interests are protected when you are renting commercial real estate in Manhattan. We know that avoiding excessive costs can mean the difference between success and failure in your business.
Need help understanding commercial liability insurance requirements? Contact Alan Rosinsky, Principal Broker at Metro Manhattan Office Space, at 212-447-5403.