Lease agreements are an insurance trap for any unsuspecting business owner operating from rented premises. Commercial leases nearly always impose insurance requirements and additional legal responsibilities upon the tenant, if these are not identified up front and addressed by adjusting the lease terms or your insurance policy you could find you are required to meet costs that you did not expect and your insurance may not provide any cover.
Lease documents are normally substantial documents of up to 100 or more pages, written by lawyers aiming to protect the interests of the owner. Usually they will contain indemnities or releases from the tenant that aim to provide maximum protection to the owner and make the tenant responsible for damage or injury even where legally they are not responsible. They also often include specific insurance requirements that the tenants needs to arrange, often the cover required is not readily available or at the least not without some customising of a standard insurance policy.
Business Insurance policies vary significantly in how they treat lease agreements where you have signed away your rights, in certain circumstances some policies will be voided where you have signed away your rights where others do allow it in certain situations. Business policies are normally customisable so some of the lease requirements may be insurable under your policy, however it will often require adjustments to a standard policy to achieve this.
The only way to know what you are agreeing to in a commercial lease is to read it. Beware though, often leases are poorly worded creating ambiguity on what the actual intentions are and you may need help from a legal specialist to correctly interpret the intent.
If you don’t review your lease you may find that you don’t have the required insurance cover or even worse a voided policy, leaving you out of pocket if something goes wrong. Make sure you understand what your responsibilities are under your lease agreement and if required adjust your insurance policies to take into account the specific requirements of the lease. Landlords will usually be prepared to adjust clauses that are unreasonable but only if you ask before it has been signed.
We can assist with a free legal review of the insurance components of your lease agreement and also adjusting your insurance so that it meets your lease requirements. Speak to your account manager for more information.