Hi,
Would you get an additional comprehensive liability insurance for your NNN retail condo if tenants and the condo association carry one (naming as an additional insured)? Some people think I don’t need to but I have others advised that I should get one as well… What are your thoughts?
P’s lawyer sues 'em all
As one who’s sued lotsa folks let me tell you the plaintiff lawyer mantra:
“Sue 'em all, more Defendants the better”.
I loved that case where I could sue 3 or more defendants and then watch them slug it out among themselves and my rate of significant damage recovery was substantially better in those multi-defendant cases.
So if you’re a possible defendant in a multi-defendant case get all the liab insurance you can get. Then you can enjoy the slug-fest letting your ins co hired lawyer do your fighting for you.
Christian,
John makes a good point.
As the answer is mostly a matter of opinion in terms of how much insurance is enough for your comfort (you do not know if you will be sued, etc) flip the issue around.
What would it cost you to buy the insurance? Have a commercial insurance broker get a quote. Depending on how they write the policy it might be inexpensive. How long do you expect to own the property? If you were to then pay an insurance premium for the full hold period, how much of an impact will that have on your expected returns.
One last thing. You might find you are better off with an umbrella policy that covers any uninsured liability for any number of things. That way you have the extra coverage for the property and just about anything else.
Insurance
I recommend getting a policy.
Read the lease. The insurance and indemnification clauses will define the limits of coverage. Then get a copy of the declarations page of the condo assn. policy. Have both reviewed by a trusted insurance broker familiar with commercial property (i.e. not residential), especially the clauses regarding co-insurance, which is not what it sounds like. Co-insurance is actually additional deductible from total coverage.
As a matter os practice, the tenant’s policy and the condo policy will pay in order of respective liability limits. In addition the lease may have language that protects you from any claim over and above the policy limits, i.e. indemnification. This is almost always the case with credit-rated tenants who self-insure.
That said, to protect against lawyers like John Merchant noted who sue everyone in sight, we carry an umbrella liability policy with coverage across all properties, including the triple-nets.