Looking for a Landlord's point of view
I deal mostly with retail tenants with limited representation of the landlord side and I have been running into the same issue regarding insurance that always confuses me - figured I'd see if you guys have a view from the landlord side so I can inform myself and perhaps work around things easier.

Basically, the issue is how to state in the lease that Landlord will carry certain levels/types of insurance. My tenant clients want to make sure that the building will be rebuilt and that they won't be tagged with slip/fall or car crash lawsuits relating to the parking lot and other common areas. 

Most of the leases I see do not require Landlord to carry any insurance (though they require Tenant to pay its pro rata share of the cost for Landlord to carry insurance). I always insert that Landlord will carry liability (usually at $2,000,000 per occurrence) and property insurance for 100% of replacement value of the shopping center. I get lots of push-back on this and I do not understand why. If I get comments to change the levels, I will usually agree (mostly I see a request to change to 80% replacement value) - but I do not know why Landlords will refuse to state that they will carry any insurance at all.

The things that really confuses me is that when push comes to shove and I refuse to back down, the Landlord will say "well, my mortgage requires that I carry "X", so lets go with that" (many cases the mortgage requires more than I am asking for). So, if the Landlord actually has insurance and is required to carry it by their mortgage, why do they fight so hard (to the point of me almost killing the deal) to keep it out of the lease. What am I missing?

Thanks.
[{"id": "d59ma9m", "text": "Lots of larger companies have blanket policies that are not specific to the subject property. This is where I see pushback from borrowers concerning loan docs.    ", "replies": [{"id": "d5am07x", "text": "I've seen that too - but the language usually states that the required insurance can be covered by a blanket policy", "replies": [], "depth": 2}, {"id": "d5cfmy3", "text": "blanket policies are a tricky animal because someone that knows insurance needs to assess the risk of the borrower's entire portfolio which is also dynamic. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "d59oa03", "text": "Commercial landlord here, why would the tenant want to ensure the landlord has insurance?  That doesn't make sense to me.  The landlord's insurance policy's cannot cover the tenant's liability. \n\nIf there is a slip/fall incident that is the landlord's responsibility, the plaintiff won't be going after the tenant anyway,  so why does the tenant care?  Assuming the landlord lost and became insolvent, the new owner of the property, either the plaintiff or bank, is still bound by the lease the tenant signed so it really doesn't affect them.  \n\nJust because the landlord has insurance doesn't mean he will rebuild either.   I often insure my properties to fair market value- not replacement cost.  If my building burned down, I would sell the land, take the insurance check and buy something equivalent. \n\nFrom my perspective, why would I want a clause that could cause me to be in default on the lease (say I was late on my premium or something minor) on something that doesn't affect the tenant?  That is unnecessary liability in my opinion, so yes I would reject it. ", "replies": [{"id": "d59okc8", "text": "That makes more sense - though I do disagree with all of it from a tenant perspective", "replies": [{"id": "d59xy1n", "text": "If that's the case then ask for a waiver of subrogation on the landlords insurance policy, I believe that's what you are looking for.\n\nEdit: you are also probably looking for some sort of indemnification against claims but I've never seen that in favour of a tenant, only the landlord.", "replies": [{"id": "d59y4cl", "text": "No, what I'm looking for is an obligation that landlord carry a minimum amount of insurance coverage for the term of the lease.  The waiver of subornation is easy to get - but worthless to tenant if landlord doesn't have insurance", "replies": [{"id": "d59zkgn", "text": "The waiver would be coming from the insurer, it should be evidenced on the policy, which would confirm insurance is placed.\n\nLet me read some of my leases tomorrow and I'll see how we write in landlord obligations and how some of the ones I have inherited wrote it.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "d59y05k", "text": " Are these NNN leases and are you on the west coast by chance? Also I think you're blending the 2 different types of insurance that you see in retail leases. This confused the hell too. I like to think like the pro-rata share that is being \"passed through\" to the tenant is the insurance that traces the exterior of the tenant's premises which (at least on the east coast) is why it is always the smallest of the pass throughs (i.e., CAM = $6.76/sf, RE Taxes = $5.17/sf &amp; insurance = $0.29/sf). On top of that the tenant will be required to carry liability insurance. A car runs through the front door = pro rata pass through insurance, customer falls = landlord's issue (who cares), something squirrelly happens inside the store = tenant's liability insurance. I have no idea if this makes any sense. My guess is the ones you are successful in getting to agree to the language are single tenant buildings.  ", "replies": [{"id": "d59yna6", "text": "You are right, these are NNN leases, but the payment is not the concern.\n\nMy concern is that most landlord form leases say - tenant is required to carry liability insurance in $x.xx amount to cover liability inside the store or caused by tenant and property insurance that will cover tenant's property for full replacement value. Then is says landlord will carry whatever insurance landlord feels like carrying.\n\nThe concern is that landlord may feel like carrying no insurance. So, customer comes in and buys some stuff then goes to their car and trips on a rock in the parking lot, falls and breaks a hip. They sue the tenant because they shopped there and the normal procedure is to sue everyone. Landlord should be liable because it is the parking area, but landlord has not insurance and the entity only owns the shopping center which is highly leveraged, so tenant may end up on the hook because the jury will want the injured party to be compensated.\n\nOther concern - tenant builds the store and puts $150K into construction. Fire guts the center. Landlord has no insurance so he decides not to fix it. Tenant does not get to run the store and make money and tenants insurance payout will not compensate for lost sales, cost to find a new location and other expenses. If landlord has insurance the shopping center will probably get rebuilt.\n\nSince landlord most likely has insurance (I've never seen one that didn't) I don't understand why they will not say in the lease that they will carry a minimum amount.", "replies": [{"id": "d59z7lo", "text": "What other insurance would they need if tenant have liability for interior and property insurance for exterior? The parking lot is owned by the landlord so the tenant has no connection to it as it is not part of their leased premises. That is a common area and not part of their leased Premises. This all goes back to the SNDA. ", "replies": [{"id": "d59zcwk", "text": "I want the landlord to carry insurance. Landlords fight me on this and want the lease to say that landlord has no obligation to carry insurance on anything", "replies": [{"id": "d5a1t9k", "text": "It is redundant and they aren't going to bind themselves to something unnecessarily. Also, are you a tenant or a broker?  ", "replies": [{"id": "d5a3bij", "text": "Why is it redundant? The lease says nothing about landlord carrying insurance, so adding language stating that they will is just one representation.\n\nIt is also necessary for landlord to insure against liabilities.\n\nI negotiate leases for tenants - not sure why that matters", "replies": [{"id": "d5a4hi4", "text": "You should just stick to residential ", "replies": [{"id": "d5a5qcs", "text": "Are you serious? You can't give a reason why a landlord who carries insurance is unwilling to say they carry insurance as part of the lease and somehow you think I need to stick to residential? ", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "d5cfkfc", "text": "maybe consult with a lawyer because I feel like the scenario you're describing (the slip and fall in the parking lot) is a frivolous lawsuit and the claim against your client would be thrown out of court.  \n\nthe other one, the fire, that's a business risk you'll have to take. Your client will never be reimbursed for those costs. Those are startup costs, not operating costs. you won't have any rent or utilities to pay if the store's down with fire, so I'm not sure that I see the issue.  ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "d5a6j59", "text": "A tenant may want a landlord to carry a CGL policy before it enters their premises to make repairs, inspect the premises, or show the space to prospective lenders/purchasers/tenants.  Allowing the LL to do so exposes the Tenant to liability if there's an injury as a result and the LL doesn't have insurance. This can be a big deal where the tenant is self insuring CGL type claims.", "replies": [], "depth": 2}, {"id": "d5aniwc", "text": "Solid points - but a tenant that has some leverage in a good market might want to see it. \n\nOne reason is that it ensures that one bad incident (slip and fall, light post falling, pedestrian gets hit and markings aren't correct) won't cause the landlord to go insolvent, which then could likely lead to the deterioration in overall quality of the property. ", "replies": [], "depth": 2}, {"id": "d62uc5v", "text": "This.  LL as stated has insurance that is mandated by the lender and if he fails to pay the premiums, he is already in technical default to the note.  I have had a slip/fall case on a retail property a couple of times, and my insurance covered down on it on one occasion.  The other was an employee of a tenant trying to push a heavy cart up an icy driveway when there were covered stairs to use.  They dinged the tenant for that, which they should.\n\nIt is understood that the property is insured so having another useless paragraph in a lease that some slipknot tenant can try and play games with is not in the cards.  ", "replies": [], "depth": 2}], "depth": 1}, {"id": "d59whu8", "text": "I think I can offer some insight.  The 2013 Additional Insured Endorsement limits the additional insured coverage to the lesser of policy coverage or the amount required under the contract (the Construction Contract, the Lease or the Loan Document). So if the Lease only requires $1,000,000.00 in coverage, but the actual coverage is $5,000,000.00, the insurer only has to pay $1,000,000.00 to the Additional Insured.  If no limit is stated, they may not have to pay anything.  Big concern for both the upstream and downstream parties.  Something like the following might get around it: \"coverage shall be in the minimum amount of (i) $__________ or, (ii) if higher, the insurance policy limits.  Hope that makes sense.  ", "replies": [], "depth": 1}, {"id": "d5a6nbl", "text": "Is there a self-help remedy in your lease? Maybe they are concerned with the Tenant going out and getting CGL on behalf of the LL or casualty coverage on the building, then offsetting against rent?", "replies": [{"id": "d5am329", "text": "I have never had that raised as an argument - but that could be in the landlord's mind when he denies my request. Though, the self help provisions are usually only tied to repair obligations and require 30 day advance notice, so if it applied to insurance, Tenant would have to give notice and allow Landlord 30 days to get insurance, so I would think that would mitigate those concerns.", "replies": [{"id": "d5apyxu", "text": "I'd check your self help provision. Usually they are applicable to any default.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]