A Tenant’s Insurance Policy Doesn’t Necessarily Protect The Property Owner

on Nov 20, 2022 01:49:PM

Most leases require the tenant to maintain liability insurance, which covers the risk that someone gets hurt on the property and sues. Because that injured person will probably sue both the tenant and the property owner, leases typically require the tenant’s insurance to name the landlord as an “additional insured.” That way, the insurance company will have an obligation to protect both the tenant and the property owner when the litigation begins. All of that should give the property owner comfort. But the comfort is not complete, as demonstrated yet again in a recent New York case. There, someone tripped and fell on the sidewalk. They sued both the tenant and the property owner. The property owner was named as an additional insured on the tenant’s insurance policy and asked the tenant’s insurance company to deal with the litigation. The tenant’s insurance company denied coverage to the property owner. The company stated that a liability insurance policy covers an “additional insured” only if the liability arises from the negligence of the policyholder, in this case the tenant. If the tenant were responsible for maintaining the sidewalk and negligently failed to do so, then the insurance company would have covered both the tenant and the property owner. In this case, however, the tenant clearly had no responsibility for the sidewalk, so could not have been negligent in maintaining it. The only possible negligent party was the property owner, who was legally responsible for maintaining the sidewalk. Thus, the property owner received no benefit in this particular litigation by being named as an additional insured on the tenant’s liability policy. Read more