Insurer has a hard time subrogating against possibly negligent landlord
A company in Tennessee leased a storage facility. A shed owned by the landlord and located next to the leased premises caught fire in 1998, allegedly because of the landlord's and rental agent's negligence. The fire spread to the leased property, causing substantial damage to the tenant's personal property. The insurer paid the tenant more than $1.1 million for the loss, then subrogated against the landlord and its rental agent.

The lease's insurance provision stated, in part, “(a) Tenant, at its sole cost and expense, but for the mutual benefit of Landlord and Tenant, shall during the term of this lease keep the leased premises insured against loss under a Broad Form Comprehensive General Liability Insurance Policy which insures against claims for bodily injury, death, or property damage, occurring on, in, or about the leased premises and on, in, or about the adjoining street, property and passageways …. (b) Tenant shall effect for its own account any insurance on its equipment, inventory, and other personal property.”

The lease also contained an indemnity provision stating, in part, “Lessee shall indemnify Lessor against all expenses, liabilities, and claims of every kind, including reasonable counsel fee, by or on behalf of any person or entity arising out of either (1) a failure by Lessee to perform any of the terms or conditions of this lease, (2) any injury or damage happening on or about the demised premises.”