Limiting tenant liability in a commercial policy
Coverage Q&A: The insured landlord wishes to cap the amount of liability under a tenant lease.
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Editor’s Note: In this week’s question, we have an insured landlord who wishes to cap any liability against the tenant at $75,000.
Question: My policyholder has lessors’ risk CGL policy. One of their tenants is negotiating to terminate their lease early. The insured is going to enter a lease termination agreement with their tenant. In that agreement, they will cap any liability against the tenant (contract, tort, or otherwise) at $75,000. They wish to know if that runs contrary to the coverage provided in the CGL under an “insured contract.” Please advise.
— Illinois Subscriber
Analysis: In a lease of premises, a tenant is responsible for its acts or omissions under common law and its successor statutes.
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