A
recent personal injury case demonstrates that commercial property owners simply
cannot be too cautious when it comes to ensuring their status as an additional
insured on certificates issued to their tenants and contractors.
Specifically, owners should not rely on representations made by tenants and
contractors as to communications that the latter may have had with their
insurance agents and brokers regarding coverage. In
the Superior Court case of Smith v. Roche Bros., et al. v. Perdoni, the Court
rejected the claim filed by Roche Bros., supermarket chain and property owner,
against the insurance agent of its snowplowing subcontractor, Perdoni, whose
failure to perform its plowing services allegedly caused to the plaintiff’s
personal injuries. The Court found no evidence to support Roche Bros.
contention that Perdoni’s insurance agent had been made aware of Perdoni’s
agreement to add Roche Bros. as an additional insured on its general liability
policy (in fact, Perdoni disputed his assent to this contractual condition,
which both parties admitted had been made orally and not in writing). Ensuring
adequate insurance coverage is of critical importance to commercial property
owners, who will usually be named in any suit for personal injuries or property
damage caused by one or more of their tenants, employees, contractors and
subcontractors. But too often, commercial property owners do not perform the
due diligence necessary to confirm their status as an additional insured.
Worse yet, owners will sometimes assume that their insurance agents (or those
of their tenants or contractors) will perform such "risk management"
functions based simply on a generalized knowledge of the parties'
business operations (e.g. knowledge that the client has several
commercial tenants, or that the client is performing significant construction
renovations on its property). When
a tenant or contractor fails to add the property owner as an additional insured
for purposes of coverage or liability, as required under the parties' lease or
contract, it is easy enough for the owner to bring suit for breach of
contract. However, the tenant or subcontractor will often be unable to
satisfy a full judgment for serious personal injury or property damage.
Owners will then sometimes attempt to shift the responsibility for ensuring
adequate coverage on to the tenant or contractor's insurance agency. As
the Smith case demonstrates, however,
insurance brokers do not owe their clients any special legal or ethical duty in
this respect, and have only a duty of care with respect to required insurance
coverage of which they have been made aware. Owners
should therefore demand a copy of any amended insurance certificates naming
them as an additional insured from their tenants or contractors, and
communicate the need for such amendments directly to the insurance agents of
their tenants and contractors. If you or your business have questions relating to your
insurance or that of a tenant or subcontractor, please contact us at
508-381-0499.
Commercial Property Owners: Ensure Your “Insured” Status
by Ryan P. Avery on Mar. 12, 2015
Summary
A recent personal injury case demonstrates that commercial property owners simply cannot be too cautious when it comes to ensuring their status as an additional insured on certificates issued to their tenants and contractors.