Real Estate Tip – Tricky Business Part II: Waiving Claims, Subrogation and Insured Losses for Landlords

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Tricky Business Part 1 discussed indemnification for landlords “against all claims.” Part 2 explains how to be certain your insurance covers any claims you waive and all claims against you that have not been waived.

Example: If a tenant waives claims against a landlord for water damage to personal property in a leased space but not in a common area, the tenant needs insurance for in-space casualty loss. The landlord also needs similar common area insurance.

By waiving subrogation, the recovery for any loss stops at the insurance company level to reduce the risk of litigation. Both parties can limit their subrogation waiver by the amount or type of risk, but limited waivers mean increased risk of litigation.

Work with your insurance agent and experienced counsel to match insurance provisions to waiver provisions in the lease.

Today’s real estate tip is brought to you by Rick Smith, a member of Bernstein Shur’s Real Estate Practice Group. Stay tuned for more useful tips for real estate professionals.

For more information on subrogation and insurance provisions, contact Rick at rsmith@bernsteinshur.com or 603 623-8700 ext. 8829 or 207 774-1200.