Do you have a sublease with another business?

Many of my marina and resort clients sublease a restaurant operation. If you do, there are some important steps that you need to take to protect your business from liability claims associated with your lessee's operations. This article will assume that you have a $1 million limit per occurrence on your general liability policy that protects your business. If you sublease to another business, for example, a restaurant operator, it only makes sense that you require that lessee to maintain a general liability policy with at least a $1 million limit per occurrence. If your lessee sells any alcoholic beverages, they need a $1 million liquor liability policy as well.

In addition to requiring your lessee to maintain the same limits as on your own policy, you should require that they add your business as an additional insured on their liability policy(s). That includes their general liability policy as well as any other liability policies such as a liquor liability policy. If your business were sued for something that occurred due to your lessee's operations, their liability policy would have to respond on your behalf. This protects your limit of liability on your own liability policy and keeps accountability where it should be, with your lessee. You should request a Certificate of Liability Insurance that documents your business as an additional insured and documents that your lessee has a $1 million limit of liability.

Doug Timmons, CIC, CMIP
Marina and Resort Insurance Specialist
Commercial Risk Service