Docstoc

Copy of Sample Business Liability Insurance Policy

Document Sample
Copy of Sample Business Liability Insurance Policy Powered By Docstoc
					                                                Sample Clauses

                    Tenant Carries Property Insurance in Build to Suit Lease*

                                      Jon F. ("Chip") Leyens, Jr.
                                      The Steeg Law Firm, L.L.C.
                                   201 St. Charles Avenue, Suite 3201
                                        New Orleans, LA 70170
                                         Phone: (504) 582-1199
                                    e-mail: JLeyens@steeglaw.com


Explanatory Notes:

   The clauses below are excerpted from a landlord build to suit lease for a single tenant
    property
   The landlord’s standard operating practice (including on single tenant buildings) is to enter
    into so-called “triple net” leases pursuant to which the landlord carries property and other
    insurance, pays property taxes and maintains common areas and structural elements, with the
    costs being passed through to the tenant(s).
   In this instance, the tenant insisted that it carry the property insurance on the building through
    its company’s blanket policy, but for tax reasons, it was important for the landlord to be
    responsible for repairs in the event of a casualty.
   A few other items to note:
        o Landlord named as additional insured (it’s not just a liability policy concept) and loss
             payee on the tenant’s property insurance
        o Landlord needs to see a copy of the tenant’s policy, not just a certificate
        o Landlord is obligated to restore after a casualty, but because the tenant is carrying the
             insurance, Landlord’s restoration obligations are limited to the amount of insurance
             proceeds it receives
        o Similarly, Landlord is a loss payee for business interruption coverage under the
             tenant’s policy, so rent abates while Landlord is repairing the premises, but only to
             the extent of proceeds received from the tenant’s insurer
   Additional caveat: The language below was negotiated and agreed to by the parties, with
    input from their respective insurance consultants. It was not drafted as a form and I have not
    had other attorneys review it. There may be a number of items that could be tweaked or
    improved in the language (and I would welcome any comments, suggestions, etc.)


Sample Clauses

        10.02 Property Insurance. At all times during the Lease Term, Tenant shall procure
and maintain, at its sole expense, special form (“all risk”) property insurance, in an amount not
less than one hundred percent (100%) of the replacement cost, covering the Premises (including
all leasehold improvements), the contents thereof, and the Building in which the Premises are


* These are excerpts from the insurance and casualty sections of the lease and certain other provisions (e.g.
indemnity and liability insurance) have not been included. The appropriateness of using the clauses above or similar
language in a lease, of course, will depend on the particular facts and circumstances of the transaction.
located (collectively, the “Property Insurance”). The Property Insurance shall contain flood
coverage and business income (“loss of rents”) coverage for a period of time not less than twelve
(12) months following the insured casualty. Landlord shall be named as an additional insured on
the Property Insurance. Landlord and Landlord’s mortgagee each shall be named as loss payees
on the Property Insurance with respect to proceeds attributable to damage to the Premises and the
Building. Landlord shall be named as loss payee on the Property Insurance with respect to
business income coverage. Tenant shall not be a loss payee with respect to proceeds attributable
to damage to the Premises or the Building or with respect to business income coverage, but
Tenant shall be the loss payee for its personal property located in the Premises. The proceeds of
the Property Insurance shall be used for the repair or replacement of the property so insured as
provided in Section 11.03, except that if this Lease is terminated in accordance with Article 11
following a casualty, the proceeds applicable to the Building, Premises and leasehold
improvements contained therein shall be paid to Landlord and the proceeds applicable to
Tenant's personal property shall be paid to Tenant. In addition to the requirements set forth in
Section 10.06 below, the Property Insurance policy shall be in a form and contain such
endorsements as are normal and customary for property insurance policies carried on similar
property or properties or by similarly situated parties.

        10.06 Policy Requirements. All insurance required to be maintained by Tenant shall be
issued by insurance companies authorized to do insurance business in the State of Louisiana and
rated not less than A-VII in Best's Insurance Guide. A certificate of insurance evidencing the
insurance required to be maintained by Tenant under this Article X shall be delivered to
Landlord not less than thirty (30) days prior to the Intended Delivery Date, except that with
respect to the Property Insurance, a certified copy of the policy shall be provided to Landlord at
least ninety (90) days prior to the Intended Delivery Date. If Tenant does not provide the
required insurance certificate or Property Insurance policy prior to the foregoing deadlines, then
Tenant’s right to occupy the Premises following the Commencement Date shall be delayed by a
period of time equal to any such delay, but Tenant nonetheless shall be obligated to pay Rent
during any such period of delay following the Commencement Date. No such policy shall be
subject to cancellation or modification without thirty (30) days prior written notice to Landlord
and to any deed of trust holder, mortgagee or ground lessor designated by Landlord to Tenant,
except that with respect to the Property Insurance Policy, Landlord and Landlord’s mortgagee
each shall be entitled to receive not less than sixty (60) days advance notice of any cancellation,
material change or non-renewal (for any reason other than non-payment of premium). Tenant
shall furnish Landlord with a replacement certificate with respect to any insurance not less than
thirty (30) days prior to the expiration of the current policy. Tenant shall have the right to
provide the insurance required by this Article X pursuant to blanket policies, but only if such
blanket policies expressly provide coverage to the Premises and the Landlord as required by this
Lease.

        10.07 Waiver of Claims. Landlord and Tenant agree to, and each does hereby, waive
all rights of recovery and causes of action against the other and against the respective officers,
agents and employees of the other, and all parties claiming by, through or under either Landlord
or Tenant, for any damage or destruction of any property of either Landlord or Tenant,
notwithstanding that the damage or destruction results from the negligence of any or all of the
parties in whose favor this agreement operates; provided, however, that the foregoing waivers

* These are excerpts from the insurance and casualty sections of the lease and certain other provisions (e.g.
indemnity and liability insurance) have not been included. The appropriateness of using the clauses above or similar
language in a lease, of course, will depend on the particular facts and circumstances of the transaction.
shall apply only to the extent of any recovery made by the parties hereto under any policy of
insurance now or hereafter issued or to the extent that a party would have recovered proceeds of
insurance had the insurance required hereunder been maintained. Any applicable policy of
insurance to be provided by Landlord or Tenant shall contain a clause allowing the foregoing
waiver of claims and denying the insurer any right of subrogation against the parties in whose
favor the waiver is made.

       10.08 Failure to Insure. If Tenant fails to maintain any insurance which Tenant is
required to maintain pursuant to this Article X, Landlord may obtain such insurance on behalf of
Tenant and Tenant shall be liable to Landlord for the costs incurred by Landlord in connection
therewith. Except for commercially reasonable (as described in Section 4.01(C)) deductible
amounts, neither party may self-insure against any risks required to be covered by insurance
without the other party’s prior written consent.

                           ARTICLE XI - DAMAGE OR DESTRUCTION

        11.01 Total Destruction. This Lease shall automatically terminate if the Premises are
totally destroyed.

        11.02 Partial Destruction of Premises.

                (a)     If the Premises are damaged by any casualty and, in Landlord's reasonable
opinion, the Premises (exclusive of any Alterations made to the Premises by Tenant) can be
restored to its preexisting condition within one hundred eighty (180) days after the date of the
damage or destruction, Landlord shall, upon written notice from Tenant to Landlord of such
damage, except as provided in Section 11.04, promptly and with due diligence repair the damage
to the Premises as provided in Section 11.03. If, in Landlord’s reasonable opinion, the Premises
can be restored within one hundred eighty (180) days after the casualty, but the restoration is not
substantially completed within two hundred ten (210) days after the date of the casualty (plus
reasonable extensions attributable to Tenant Delays or Force Majeure Delays), Tenant may
terminate this Lease by giving written notice to Landlord no later than thirty (30) days after said
deadline, but prior to the substantial completion of the repairs.

               (b)      If such repairs cannot, in Landlord’s reasonable opinion, be made within
said one hundred eighty (180) day period, then either party may, at its option, exercisable by
written notice given to the other party within thirty (30) days after the date of the damage or
destruction, elect to terminate this Lease as of the date of the damage or destruction. In the
event neither party elects to terminate this Lease as provided herein, Landlord shall, at
Landlord’s expense, repair and restore the Building as provided in Section 11.03, and, in such
event this Lease shall remain in full force and effect but the Rent shall be abated as provided in
Section 11.03.

       11.03 Repair and Restoration Obligation/ Rent Abatement. Landlord’s restoration
and repair obligation contained herein shall consist of repairing or restoring the Premises,
including repairing or restoring the Work (as defined in the Work Letter attached hereto) and all
leasehold improvements contained within the Premises that were either subsequently constructed

* These are excerpts from the insurance and casualty sections of the lease and certain other provisions (e.g.
indemnity and liability insurance) have not been included. The appropriateness of using the clauses above or similar
language in a lease, of course, will depend on the particular facts and circumstances of the transaction.
with Landlord’s consent pursuant to Article IX of this Lease or were Alterations not requiring
Landlord’s consent as provided in the last sentence of Section 9.01; provided however such
restoration and repair obligation shall be limited to the amount of insurance proceeds received by
Landlord from the Property Insurance policy required to be maintained by Tenant pursuant to
Section 10.02. Landlord shall not be obligated to repair or restore any Alterations performed
without Landlord’s consent, other than those Alterations not requiring Landlord’s consent as
provided in the last sentence of Section 9.01, and Landlord shall not be obligated to repair or
restore Tenant’s personal property or trade fixtures. Until such repairs or restoration are
completed, the Rent shall be abated from the date of damage or destruction in the same
proportion that the rentable area of the portion of the Premises which is unusable by Tenant in
the conduct of its business bears to the total rentable area of the Premises. Notwithstanding the
foregoing, the amount of Rent abatement provided herein shall not exceed the amount of
proceeds received by Landlord under the business interruption (“loss of rents”) coverage
maintained by Tenant pursuant to Section 10.02.

        11.04 Exceptions to Landlord’s Obligations. Notwithstanding anything to the contrary
contained in this Article XI, Landlord shall have no obligation to repair the Premises if either:
(a) the Building in which the Premises are located is so damaged as to require repairs to the
Building exceeding twenty percent (20%) of the full insurable value of the Building; or (b)
(Intentionally Deleted); or (c) the damage or destruction occurs less than two (2) years prior to
the Expiration Date, exclusive of option periods. In the event Landlord does not elect to repair
the Premises, this Lease shall terminate upon notice to Tenant of Landlord’s election not to
repair or restore the Premises.

       11.05 Property Insurance Deductible. In the event a claim is made by Tenant,
Landlord or an additional insured under the Property Insurance policy required to be maintained
by Tenant pursuant to Section 10.02, Tenant shall pay to Landlord the amount of the deductible
for such policy, except to the extent that such insured claim arises from or is a result of
Landlord’s negligence or willful misconduct.




* These are excerpts from the insurance and casualty sections of the lease and certain other provisions (e.g.
indemnity and liability insurance) have not been included. The appropriateness of using the clauses above or similar
language in a lease, of course, will depend on the particular facts and circumstances of the transaction.

				
DOCUMENT INFO
Description: Copy of Sample Business Liability Insurance Policy document sample