NYC Commercial Leases: Thoughts on Insurance Requirements

Almost always, NYC commercial leases require tenants to obtain, carry, maintain, and keep current various types of commercial insurance. Further, the lease will almost certainly require the landlord to be listed as a “named insured” on any required insurance policy, AND all such policies must be purchased IN ADVANCE of tenant move-in. Proof of insurance is often a prerequisite for receiving “keys.” Insurance provisions in New York City commercial leases are generally long and complicated, and you will need to have experienced commercial lease negotiators review, explain and negotiate such clauses. Call us here at Wright Law Firm NYC to help. We can be reached at (212) 619-1500. This article offers some thoughts on the insurance requirements commonly seen in NYC commercial leases.

First, let’s examine why NYC commercial landlords require insurance and why they require that they be listed as “named insureds.” Being a “named insured” in the insurance policy covers the landlord in the same manner as the tenant. Why does the landlord want and need this? Basically, since the landlord owns the property, any potential lawsuit related to the property — such as a slip-and-fall accident — could include the landlord as a party to the lawsuit. Being a “named insured” means that the insurance will cover the landlord. This coverage will protect the landlord both from the costs of defending the lawsuit and from any potential adverse judgment. Landlords will carry their own insurance, but the more coverage exists, the less risk is carried by the landlord. Plus, of course, insurance policies are expensive. Requiring that tenants have coverage lowers the costs of the landlord’s own insurance.

Typical Insurance Requirements

Now let’s turn to the type of insurance an NYC commercial landlord might require. Some options include:

  • Commercial general liability insurance — almost always required; covers things like slip-and-fall accidents, including claims for bodily injury, medical expenses, damage to property, theft, damage or loss of personal property (like inventory), etc.
  • General hazard liability insurance — often part of a general liability policy; covers fire, theft, damage caused by weather, plate glass damage, etc.
  • Workers’ compensation insurance — required by New York law for any business with employees. landlords often require this for proof that the tenant is complying with New York law.
  • Business interruption insurance — in the event of some business shutdown, pays for lost expenses, rent, etc.; this insurance protects the landlord’s interest in receiving rent required under a commercial lease.
  • Commercial auto and vehicle insurance coverage — somewhat rare, but commercial landlords often require this to cover vehicles used for work purposes.
  • Commercial umbrella coverage — a general insurance policy that increases coverage liability amounts for the other required policies

When seeking to purchase insurance, many insurance companies will “bundle” these various types of insurance into a “business owner’s policy.” One must be careful when buying insurance and ensure that what you are buying covers everything that the lease requires.

As can be seen, insurance requirements can be quite complicated. You will need some experienced legal guidance to ensure compliance with your lease obligations.

Contact the NYC Commercial Lease Negotiators at Wright Law Firm NYC Today

For more information, call the experienced New York commercial lease and real estate attorneys at Wright Law Firm NYC. We provide top-tier commercial real estate legal services for the NYC business community. To schedule a consultation, call our office by e-mail or call us at (212) 619-1500.