When a landlord changed the insurance requirements for a commercial tenant, the client's existing policy no longer met all of the requested coverage, endorsement, and limit requirements. NYC Business Group reviewed the landlord's requirements, explained what they meant, and helped identify which requirements were appropriate for the tenant's actual business operations — helping the client address the new requirements without simply accepting potentially unnecessary coverage and costs.
The Challenge
A business owner leasing commercial space received notice from the landlord that the property's insurance requirements had changed.
The updated requirements called for additional endorsements and coverage provisions that weren't included in the tenant's existing policy. Depending on the lease and business, these requirements can include items such as waiver of subrogation, primary and non-contributory coverage, hired and non-owned auto coverage, and higher limits for areas such as damage to rented premises or glass coverage.
Simply increasing or adding everything requested isn't necessarily the best solution.
Landlords may establish insurance requirements based on recommendations from attorneys or standardized lease language. In some cases, those requirements may call for limits that are unusually high for the tenant's actual exposure. Other requested coverages may not apply to the type of business occupying the space at all.
For the tenant, accepting every requirement without review can potentially result in substantially higher insurance costs.
How We Helped
NYC Business Group asked the client to provide a copy of the landlord's updated insurance requirements so we could review them in detail.
We went through the requested coverages, endorsements, and limits to determine how they compared with the client's existing insurance and, importantly, how they related to the client's actual business operations.
Where appropriate, we explained the requested insurance provisions and limits to the client and landlord. When a requested limit appeared impractical for the tenant's exposure, or when a particular coverage didn't apply to the tenant's type of business, we could identify the issue rather than simply adding unnecessary coverage to the policy.
This gave the tenant a clearer understanding of what the landlord was requesting and provided a basis for discussing requirements that might reasonably be adjusted
The Result
Instead of automatically accepting a standardized list of insurance requirements, the tenant had NYC Business Group review those requirements in the context of the business's actual operations and exposures.
That review can make an important financial difference. When requirements that don't apply to a particular tenant or unnecessarily high limits can be addressed with the landlord, the business may be able to satisfy the appropriate insurance requirements without taking on a substantial and unnecessary increase in premium.
“Insurance requirements should protect both the property owner and the tenant — but they should also make sense for the business actually occupying the space.”
Insurance support goes beyond the policy
Commercial lease insurance requirements can change, and receiving a new list of endorsements and coverage limits doesn't necessarily mean every requested provision should simply be added to an existing policy.
NYC Business Group helps commercial tenants understand what their landlords are requesting, compares those requirements with their existing coverage, and identifies areas that may need further discussion.
Insurance requirements should protect both the property owner and the tenant, but they should also make sense for the business actually occupying the space.