Liability & Insurance

Template 23

Use Template 23 for:

Real Estate Leases/License Agreements where the County is the Tenant.

  • Only for use with Real Estate Department agreements.

Example: County occupies space owned by others.

Mandatory Contractual Language

Insurance requirements should be saved and attached to the contract as an exhibit. Please edit the template so that references to the party with whom you are contracting matches the agreement. To ensure the requirements are included as part of your contract, please include the following language within the insurance section of the agreement:

_______ is required to maintain the insurance specified in Exhibit _____, which is attached hereto and incorporated herein by this reference.

Consistent Language

Edit the template to keep the language consistent with your agreement.

For example: if the template refers to: “Consultant”, but the agreement uses “Contractor”, change all references in the template to “Contractor”. If your agency is not the County (SCAPOSD, Water Agency, Fairgrounds, etc.) substitute the correct terminology for all references to “County”. If the agreement is called “contract”, “license”, “lease”, etc., edit the template to match.

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Template Assistant

Insurance Required to be Maintained by Landlord

The named insured must match the name of the entity with whom we are contracting. Some policies have several named insureds, but all insureds may not show on the certificate. If there’s no match on the certificate, request a copy of the endorsement showing the full named insured, including the entity with whom we are contracting.

Be sure the name on the Lease is the full legal name of the entity with whom we are contracting and not just a "dba" (doing business as), which is only a fictitious name.

At all times during the term of this Lease, Landlord shall purchase and maintain, at its own expense, insurance as described below, unless such insurance has been expressly waived by the attachment of a Waiver of Insurance Requirements.

Tenant reserves the right to review any and all of the required insurance policies and/or endorsements, but has no obligation to do so. Failure to demand evidence of full compliance with the insurance requirements set forth in this Lease or failure to identify any insurance deficiency shall not relieve Landlord from, nor be construed or deemed a waiver of, its obligation to maintain the required insurance at all times during this Lease.

  1. Workers Compensation and Employers Liability Insurance
    1. Required if Landlord has employees.
    2. Workers Compensation insurance with statutory limits as required by the Labor Code of the State of California.
    3. Employers Liability with minimum limits of $1,000,000 per Accident; $1,000,000 Disease per employee; $1,000,000 Disease per policy.
    4. The policy shall be endorsed to include a written waiver of the insurer’s right to subrogate against Tenant.

      If the Landlord’s employee is injured on the job, the worker’s compensation insurer will cover the claim. However, if the County is in any way responsible for causing that injury, the insurer will try to recover all or part of its payment from us. This is called subrogation. The insurer cannot recover from us if it has waived its right to subrogate. (Sample Subrogation Waiver)

    5. Required Evidence of Insurance:
      1. Subrogation waiver endorsement; and
      2. Certificate of Insurance

    If Landlord currently has no employees, Landlord agrees to obtain the above-specified Workers Compensation and Employers Liability insurance should any employees be engaged during the term of this Lease or any extensions of the term.

    If the Landlord has no employees, Workers Compensation insurance is not required. The Landlord is obligated to obtain the insurance if employees are hired after the inception of the agreement. A Risk Management waiver is not needed if the Landlord has no employees.

    To verify that the Landlord has no employees, Risk Management recommends that you have the Landlord sign the Workers' Compensation Declaration (Word: 25 kB).

  2. General Liability Insurance
    1. Commercial General Liability Insurance on a standard occurrence form, no less broad than Insurance Services Office (ISO) form CG 00 01.

      ISO (Insurance Services Office) publishes a standard CGL. Some insurers use that specific form; others use their own form with a different numbering system. Any CGL is acceptable as long as the coverage is as broad as the ISO form.

      An occurrence policy responds if the injury or damage takes place during the policy period. It doesn’t matter when the claim is filed.

      A claims-made policy responds if the claim (demand for money) is made during the policy period.

    2. Minimum Limits: $1,000,000 per Occurrence; $2,000,000 General Aggregate; the General Aggregate shall apply separately to each location. The required limits may be provided by a combination of General Liability Insurance and Commercial Umbrella Liability Insurance. If Landlord maintains higher limits than the specified minimum limits, Tenant requires and shall be entitled to coverage for the higher limits maintained by Landlord.

      Occurrence limit: the most the insurer will pay for any one accident.

      General Aggregate: the most the company will pay for all claims during the policy period, regardless of the number of accidents, injuries, claims or claimants.

      Department Waiver: You may waive the requirement for a separate per location General Aggregate if the General Aggregate is at least double the Occurrence limit.

      A Commercial Umbrella or Excess Liability policy provides additional limits which are usually shown on the Certificate of Insurance. The additional limits are added to the General Liability Limits. The combined total of the General Liability Limits and the Umbrella Limits must equal or exceed our minimum requirements.

    3. Any deductible or self-insured retention shall be shown on the Certificate of Insurance. If the deductible or self-insured retention exceeds $25,000 it must be approved in advance by Tenant. Landlord is responsible for any deductible or self-insured retention and shall fund it upon Tenant’s written request, regardless of whether Landlord has a claim against the insurance or is named as a party in any action involving the Tenant.

      Contact Risk Management (Outlook: 139 kB) if the retention or deductible exceeds $25,000. We want to verify that the party with whom we are contracting has sufficient assets to fund a large retention or deductible. A waiver is not needed.

      There is no specific field on the Certificate of Insurance for a General Liability deductible or retention.

    4. [Insert correct legal name of Tenant] shall be additional insureds for liability arising out of premises owned by or rented to Landlord, (Insurance Services Office endorsement CG 20 26 or equivalent).

      We must get a copy of the endorsement or section of the policy that makes us an additional insured. A statement on the Certificate of Insurance is not sufficient because an insurance company is bound by its policy and endorsements, not by the Certificate.

      ISO endorsement CG 20 26 covers the County for liability arising out of the landlord’s ongoing operations or from liability arising from premises owned by the landlord.

      Not acceptable – Endorsement CG 20 10: “additional insured…but only with respect to liability…in the performance of your ongoing operations FOR the additional insured(s).” With this language we are not an additional insured because the landlord is not doing any work for us.

    5. The insurance provided to the additional insureds shall apply on a primary and non-contributory basis with respect to any insurance or self-insurance program maintained by them.

      Because the County is an additional insured on the landlord’s policy, we want that policy to cover claims before any contribution from County’s CSAC protection or its self-insured retention.

      Some insurers refuse to add “ primary & non-contributory” language. In this situation, you may accept the insurance anyway. Why? Because California Government Code Section 990.8 states that a public agency’s self-insurance and/or participation in a risk sharing pool (CSAC) does not qualify as insurance. Legally, County has no insurance. The coverage provided to County as an additional insured on the licensee’s policy is the only insurance we have. By default it is primary and non-contributory. It is preferable to have the insurer provide the required language, but not mandatory.

      Marinas & Airport: Because County has commercial insurance for the Marinas & Airport, we do require evidence of primary and non-contributory coverage for all contracts relating to those facilities.

      We must get a copy of the endorsement or section of the policy that has the Primary & Non-Contributory language. A statement on the Certificate of Insurance is not sufficient because an insurance company is bound by its policy and endorsements, not by the Certificate.

      Use the alternate Evidence of Coverage language.

    6. The policy shall cover inter-insured suits between Landlord and Tenant and include a “separation of insureds” or “severability” clause which treats each insured separately.

      This guarantees that the County will be covered if it is sued by the landlord and that the landlord will be covered if it is sued by the County. This language is standard in the General Liability policy; you do not need to get a specific endorsement to satisfy this requirement.

    7. The policy shall be endorsed to include a written waiver of the insurer’s right to subrogate against Tenant.

      If the landlord’s insurer pays a claim to a third party and the County is partially responsible for the injury or damage, the insurer will seek reimbursement from the County. This is called subrogation. The insurer cannot recover from us if it has waived its right to subrogate.

      Department Waiver: You may waive this requirement if the insurer will not provide a Waiver of Subrogation.

    8. Required Evidence of Insurance:
      1. Copy of the additional insured endorsement or policy language granting additional insured status, and
      2. Certificate of Insurance.
    9. (Substitute the following for h. if the work, event or location involves marinas or the airport. Do not leave both versions of h. in the Lease!)

    h. Required Evidence of Insurance:

    1. Copy of the additional insured endorsement or policy language granting additional insured status;
    2. Copy of the endorsement or policy language indicating that coverage is primary and non-contributory; and
    3. Certificate of Insurance.
  3. Property Insurance for Building and Tenants’ Improvements & Betterments
    1. The insurance shall cover the Building (excluding land) and all improvements and structures on the land.
    2. Insured perils shall be “special form” or “all risks”.

      “Special Form” or “All-Risks” means the property is insured for all losses unless the specific cause of loss is excluded. Some common exclusions are: earthquake and other earth movement, flood, wear & tear, lack of maintenance.

    3. The minimum amount of insurance shall be the full current replacement cost of the building and all improvements and structures on the land, including the cost of debris removal. This amount shall be re-determined annually by Landlord, subject to approval by Tenant.

      Replacement Cost is the current construction cost for comparable improvements. Debris removal is the cost to clear the site of damaged property.

    4. The insurance shall apply on a replacement cost basis, without deduction for depreciation.

      This means that the insurer will not subtract anything for physical depreciation of the property.

      Example: If the 10 year old roof of a building is damaged, the insurer pays for a new roof and does not subtract anything for physical depreciation.

    5. The insurance shall cover the interests of both Landlord and Tenant. Tenant shall be endorsed as an additional insured with respect to its interest in covered property; other tenants may be added as additional insureds.

      If we have made alterations, installations, or additions to the building at our own expense, the tenant’s insurance will cover our financial interest in those improvements.

      Examples of improvements that County might make as a tenant: wiring, plumbing, flooring.

    6. All moneys collected from the insurance company shall be held by Landlord in trust to be used and applied exclusively in accordance with Article _____ entitled “Destruction and Untenantability of Premises”.
    7. Tenant shall not be responsible to Landlord for any coinsurance penalty assessed by the insurance company.
    8. If the policy has a deductible, Landlord shall be responsible for the full amount the deductible without contribution from Tenant.
    9. Required Evidence of Insurance:
      1. Additional insured endorsement; and
      2. Certificate of Property Insurance or Evidence of Commercial Property Insurance.
  4. Rental Value Insurance
    1. The insurance shall cover loss of rents resulting from an insured cause of loss under a “special form” or “all risks” policy.

      If the building is damaged by an insured peril, the County and other tenants may not have to pay rent while the premises can are untenantable. The landlord’s insurance company will pay for the loss of rents, helping to ensure that the landlord will have enough funds to stay in business.

    2. The period of insurance shall be the entire period of restoration of damaged property and shall not be limited to a period of 12 or 18 months.
    3. The limit shall be one hundred fifty percent (150%) of the annual rents payable by all tenants occupying the building.
    4. Required Evidence of Insurance: Certificate of Property Insurance or Evidence of Commercial Property Insurance.
  5. Mold Liability Insurance
    1. The insurance shall cover claims for mold-related bodily injury and property damage (including loss of use) and remediation expenses.

      The General Liability policy does not insure injury or damage caused by mold. Mold liability insurance covers the landlord if we present a claim for injury, damage or loss of use of the premises resulting from mold. This insurance is often included in a Pollution Liability policy.

      Department Waiver: You may waive this requirement if the landlord is unable to obtain the coverage.

    2. The insurance shall cover claims arising out of the presence of mold, microbial matter, or mold or fungus spores on the Premises.
    3. Minimum Limit: $5,000,000 per occurrence
    4. Required Evidence of Insurance: Certificate of Insurance
  6. Standards for Insurance Companies

    Insurers shall have an A.M. Best’s rating of at least A:VII.

    A.M. Best is one of the services that reviews insurers’ financial information. We want the insurer to be able to pay its claims. The letter (A+, A, A-, B+, etc.) is Best’s rating of financial strength. The number (XII, VII, etc.) refers to the insurer’s financial size. You can check the rating at: http://www.ambest.com/ - the service is free, but you need to register and log in.

  7. Documentation
    1. The Certificate of Insurance must include the following reference: [insert location or other identifier].

      Putting the reference on the Certificate of Insurance does not increase our protection. This requirement is included for your convenience.

    2. All required Evidence of Insurance shall be submitted prior to the execution of this Lease. Landlord agrees to maintain current Evidence of Insurance on file with Tenant for the required period of insurance.
    3. The name and address for Additional Insured endorsements and Certificates of Insurance is: [insert full legal name of Tenant and mailing address].
    4. Required Evidence of Insurance shall be submitted for any renewal or replacement of a policy that already exists, at least ten (10) days before expiration or other termination of the existing policy.
    5. Landlord shall provide immediate written notice if: (1) any of the required insurance policies is terminated; or (2) the limits of any of the required policies are reduced.
    6. Upon written request, certified copies of required insurance policies must be provided within thirty (30) days.

      Because it takes much time and substantial expertise to review an entire insurance policy, we don’t routinely request it. However, if we cannot determine the adequacy of coverage from the certificate and endorsements, this is an option.

  8. Policy Obligations

    Landlord’s indemnity and other obligations shall not be limited by the foregoing insurance requirements.

  9. Material Breach

    If Landlord fails to maintain insurance which is required pursuant to this Lease, it shall be deemed a material breach of this Lease. Tenant may give notice to Landlord to reinstate or acquire the affected insurance. Should Landlord fail to reinstate or acquire the affected coverage within ten (10) days of Tenant’s notice to reinstate or acquire such insurance, Tenant may either terminate this Lease, reinstate or acquire the affected insurance, and Landlord shall reimburse Tenant for the necessary cost at Tenant’s option.

Insurance Required to be Maintained by Tenant

At all times during the term of this Lease, Tenant shall purchase and maintain, at its own expense, insurance or self-insurance as described below.

  1. General Liability Insurance
    1. Minimum Limit: $1,000,000 per occurrence.
    2. The policy shall be endorsed to include a written waiver of the insurer’s right to subrogate against Landlord.
    3. Required Evidence of Insurance: Certificate of Insurance or Letter of Self-Insurance.

      To get evidence of our insurance for the landlord, please submit a Request for Evidence of County’s Insurance.

  2. Documentation
    1. All required Evidence of Insurance shall be submitted prior to the execution of this Lease. Tenant agrees to maintain current Evidence of Insurance on file with Landlord during the term of this Lease.
    2. Required Evidence of Insurance shall be submitted for any renewal or replacement of a policy that already exists, at least ten (10) days before expiration or other termination of the existing insurance or self-insurance.

Contact Information

Jamie Bloom, Insurance Manager

Reesha Ruel, Liability Manager

Risk Management Division

Human Resources Department

Business Hours
Monday – Friday
8:00 AM – 5:00 PM
Contact us by Phone
Address
575 Administration Drive
Room 116 B
Santa Rosa, CA 95403
38.465237, -122.725363

Contracts Exempt from Insurance

Certain contracts pose low risk, therefore, they are exempt from insurance requirements.

Learn more