As an adjuster faced with a premises liability claim, a detailed lease agreement review is crucial when your insured is a property owner or a tenant. The provisions and language within the lease can significantly impact the allocation of liability and responsibility in such cases.
In this blog post, we will discuss items that adjusters must watch for when reviewing a lease agreement in the context of premises liability claims. An adjuster can effectively navigate their insured’s legal obligations and potential liability by understanding the lease’s implications.
Indemnification and Hold Harmless Clauses:
An adjuster must review the lease agreement for indemnification and hold harmless clauses. These provisions outline the parties’ responsibilities in terms of legal defense, financial compensation, and liability allocation in the event of a premises liability claim, and it protects a party from damages when the other party to the lease causes those damages.
Additional Insured Status
Determine if the lease agreement grants the property owner or tenant additional insured status. This status can potentially increase the amount of insurance coverage available and provide other resources for defense costs for the party named as additional insured.
Maintenance and Repair Obligations:
Carefully review the lease to understand the parties’ property maintenance and repairs responsibilities. Clauses that impose a duty to keep the premises safe, perform regular inspections, and promptly address hazardous conditions are important to review and note for your claim file. A breach of a party’s duty to maintain the premises safely can be grounds to establish liability against them.
Notice Requirements
Evaluate the lease for any specific notice requirements related to incidents or accidents on the premises. The adjuster should review any timelines and procedures for reporting incidents involving injuries or damage. If the insured did not report the claim promptly to the insurance company, examine whether your insured was not notified properly about the claim by their lessee and whether they breached any lease provisions.
Insurance Requirements
A claims adjuster must assess the insurance provisions of the lease. These provisions will typically describe the minimum coverage requirements and specify whether those limits are needed to protect both parties to the lease. Non-compliance with these requirements can impact the availability of coverage and potential indemnification by one party to another. If there are issues relating to the amount of coverage required compared to the amount obtained, one party may have grounds for a breach of contract claim against another.
Lease Termination and Default Provisions
The adjuster should review the lease’s termination and default provisions to understand the circumstances under which any of the parties to that lease can initiate a termination and the potential consequences of default. If there is a default, other provisions may no longer apply to the claim.
Risk Allocation and Waiver of Subrogation
The adjuster should read the lease agreement and check for clauses that address the allocation of risk and potential waivers of subrogation. These clauses may limit or impact the ability to pursue legal action or insurance claims against the other party in a premises liability claim.
Compliance with Applicable Laws and Regulations
The adjuster should determine whether the lease agreement contains provisions that comply with relevant laws, regulations, and safety standards. If the lease language is unenforceable, your insured may not have to comply with those provisions. Often, a blanket transfer of liability from one party to the other is considered “against public policy;” therefore, your insured may not be required to comply with that provision.
Confidentiality and Non-Disparagement
Review any confidentiality and non-disparagement provisions in the lease. Understanding the restrictions on discussing the premises liability claim and maintaining confidentiality can help protect the parties’ interests and minimize reputational damage.
Reviewing a lease agreement in the context of premises liability claims is essential for understanding the parties’ rights, obligations, and potential liabilities. Property owners and tenants can navigate their legal responsibilities more effectively by carefully considering indemnification clauses, additional insured status, maintenance obligations, notice requirements, insurance provisions, termination and default provisions, risk allocation, compliance with laws, and confidentiality agreements. Seeking legal guidance and consultation from professionals experienced in premises liability claims can provide valuable insights and ensure a thorough lease agreement review. A comprehensive understanding of the lease agreement’s implications empowers parties to make informed decisions and take appropriate actions when facing premises liability claims.
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