Signing on the Dotted Line

As a new tenant in a building, you’ll typically be required to sign a lease. Lease language and provisions can differ greatly; when signing a lease (or any legal document for that matter), whether it’s your first lease or your tenth, read and understand the content of the agreement.

If a section doesn’t make sense, don’t sign the contract! It is highly recommend that you have a legal team review it, as well. They should be able to help you decipher the requirements and let you know whether the provisions are reasonable.

Often, business owners feel pressured to present certificates of insurance due to a landlord or financial company’s requests. Yes, it might seem like the company of interest is hounding you, but once you sign a contract, your landlord or financial company has a vested interest in your business. Leases typically contain clauses that could affect the property and liability coverage you need. If you aren’t in compliance, there could be some unfortunate ramifications, even eviction. Now, just think; if this interest is concerned about your business having insurance, don’t you think you should also be concerned? To this day, I still get phone calls from uninsured business owners wanting insurance only because their landlord requires them to have liability insurance.

One of the more common reasons that landlords and financial institutions require liability insurance is that if there is a general liability claim at your salon, they want to make sure their interests are protected if they’re brought into the lawsuit. For example, if the landlord is brought into a “trip and fall” claim, the landlord wants to ensure that your policy will provide them with legal defense. Adding a landlord as an additional insured opens your insurance policy to additional legal defense costs, but this is a typical part of doing business.

It’s your business – there are affordable, specialized programs available to help protect your investment.

So, going back to basics, liability insurance is coverage for an insured when negligent acts result in bodily injury and/or property damage on the premises of the business, or when someone is injured in the general operation of a business. This type of insurance can protect an insured from financial loss by transferring the burden from the insured or the additional insured to the insurance company. Now does it make sense why a landlord (or vested interest) would want to be listed on your insurance policy?

That being said, once you’re aware of a claim or are named in a lawsuit, it’s imperative that you advise your insurance agent, even if your landlord says they will “take care of the claim”. Insurance contracts include clauses that indicate the amount of time you have to submit a claim. If a claim is not submitted in a reasonable amount of time, the insurance company might have to deny it. So, if you’re aware of an incident, advise your insurance agent right away; they can get all the current details from you. It may not develop into anything, and that would be the best scenario. If the claim does escalate, your insurance carrier can get working on your behalf right away.

These are only a few reasons why landlords and other types of financial companies want to be added on your policy. Receiving a request for a certificate of insurance should not be the only reason to get insurance. It’s your business, and there are affordable, specialized programs available to help protect your investment.