Template 31

Use Template 31 for:

Commercial Aviation Tenant/Operator agreements

Mandatory Contractual Language

Insurance requirements should be saved and attached to the contract as an exhibit. 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

Instructions for completing the Insurance Exhibit:

1. Substitute "Operator" for "Tenant" if this is an operating agreement for a subtenant.

2. Substitute "Agreement" for "Lease" if this is an operating agreement for a subtenant.

3. Fill in the appropriate limits from the Minimum Insurance Requirements Chart. If the operations pose above-average risk, consider increasing the limits.

Tenant shall maintain and require its subcontractors and agents to maintain insurance as described below in accordance with the Minimum Standards unless such insurance has been expressly waived by the attachment of a Waiver of  Insurance Requirements.

County 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 Tenant from, nor be construed or deemed a waiver of, its obligation to maintain the required insurance at all times during the term of this Lease or any extensions of the term.

1. Workers Compensation Insurance & Employers Liability Insurance
   1. Required if Tenant has employees.
   2. Workers Compensation insurance with statutory limits as required by the Labor Code of the State of California
      Under California’s Labor code, if the party with whom we are contracting is a privately held corporation whose only employees are its sole shareholders, workers compensation insurance is not required.  Similarly, if the party with whom we are contracting is a partnership or limited liability company with no employees other than its general partners or managers, workers compensation insurance is not required.  A waiver is not needed.
   3. Employers Liability with 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 County
      If a Tenant’s employee is injured on the job, the workers 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.
   5. Required Evidence of Insurance:
      1. Subrogation waiver endorsement; and
      2. Certificate of Insurance
      If Tenant currently has no employees, Tenant 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.
2. Airport/Aviation Commercial General Liability Insurance
   1. Minimum Limits: ______________ per Occurrence; _______________General Aggregate;
      _______________Products/Completed Operations Aggregate.

      Fill in limits from the Sonoma County Airport Summary of Minimum Insurance Requirements For Commercial Operators.

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

      General Aggregate: the most the company will pay for all claims resulting from damage or injuries that occur before the work is completed, regardless of the number of accidents, injuries, claims or claimants. A policy with no general aggregate is acceptable because there’s no annual cap on the amount the policy will pay.

      If Tenant maintains higher limits than the specified minimum limits, County requires and shall be entitled to coverage for the higher limits maintained by Tenant.

   2. 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 County.  Tenant is responsible for any deductible or self-insured retention and shall fund it upon County’s written request, regardless of whether Tenant has a claim against the insurance or is named as a party in any action involving the County.
      Contact Risk Management 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.
   3. The County of Sonoma, its officers, agents and employees shall be endorsed as additional insureds for liability arising out of Tenant’s occupancy, maintenance or use of the premises.
      We need language similar to the wording on Sample Form 9.
      
      Substitute the following for  c. if this is an operating agreement for a subtenant.  Do not leave both versions of c. in the agreement
   4. The County of Sonoma, its officers, agents and employees shall be endorsed as additional insureds for liability arising out of Operator’s ongoing operations at the premises.
      We need language similar to the wording on Sample Form 7. We cannot accept any additional insured endorsement that limits our additional insured status to work performed FOR us. An additional insured endorsement that has language similar to the wording on Sample Form 4 is not acceptable.
   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 Tenant’s policy, we want that policy to cover claims before any contribution from County’s Airport Liability policy, its CSAC protection or its self-insured retention. We must get a copy of the endorsement or section of the policy that has the Primary & Non-Contributory language. statement on the Certificate of Insurance is not sufficient because an insurance company is bound by its policy and endorsements, not by the Certificate.
   6. The policy shall be endorsed to include a written waiver of the insurer's right to subrogate against County.
      If the Tenant’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.
   7. The policy shall cover inter-insured suits between County 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 Tenant and that the Tenant will be covered if it is sued by the County. This language is standard in General Liability policies; you do not need to get a specific endorsement to satisfy this requirement.
   8. Required Evidence of Insurance:
      1. Additional insured endorsement or policy language granting additional insured status
      2. Endorsement or policy language indicating that insurance is primary and non-contributory;
      3. Subrogation waiver endorsement; and 
      4. Certificate of Insurance.
3. Hangarkeepers Legal Liability (Required if Tenant stores or has care, custody or control of customers’ aircraft
   1. Minimum Limits: ________________ Each Aircraft; ________________ Each Occurrence.
      Fill in limits from the Sonoma County Airport Summary of Minimum Insurance Requirements For Commercial Operators.
   2. Required Evidence of Insurance: Certificate of Insurance.
4. Automobile Liability Insurance
   1. Minimum Limit: $____________ combined single limit per accident.
      Fill in limits from the Sonoma County Airport Summary of Minimum Insurance Requirements For Commercial Operators.
   2. Insurance shall apply to all owned autos.  If Tenant currently owns no autos, Tenant agrees to obtain such insurance should any autos be acquired during the term of this Lease or any extensions of the term.
   3. Insurance shall apply to all hired and non-owned vehicles.

      Hired Autos: vehicles the tenant rents or borrows.

      Non-owned Autos: vehicles owned by the tenant’s employees and contractors.

      If “Any Auto” is checked on the Certificate of Insurance, it includes owned, hired and non-owned autos.

   4. Required Evidence of Insurance: Certificate of Insurance.
5. Aircraft Liability Insurance  (Required if Tenant operates owned or non-owned aircraft.
   1. Aircraft Liability Insurance covering each aircraft owned by or leased to Tenant.
   2. Aircraft Liability Insurance covering non-owned aircraft. (Required if Tenant operates  non-owned aircraft.
   3. Minimum Limits: _____________ combined single limit, _____________ sublimit per seat/passenger.  If Tenant maintains higher limit than the specified minimum limits, County requires and shall be entitled to coverage for the higher limits maintained by Tenant.
      Fill in limits from the Sonoma County Airport Summary of Minimum Insurance Requirements For Commercial Operators.
   4. County of Sonoma, its officers, agents and employees shall be endorsed as additional insureds for liability arising out of the operation of aircraft owned by or leased to Tenant.
   5. Required Evidence of Insurance:
      1. Additional insured endorsement or policy language granting additional insured status;
      2. Endorsement or policy language indicating that insurance is primary and non-contributory; and
      3. Certificate of Insurance.
6. Certified Flight Instructors Professional Liability Insurance  (Required if Tenant provides flight instruction
   1. Minimum Limits: $100,000 per passenger;  $1,000,000 per occurrence.
   2. Required Evidence of Insurance: Certificate of Insurance.
7. Non-Owned Aircraft Liability Insurance for Students and Renters  (Required if Tenant’s operations include aircraft rental or flight instruction in its own aircraft.)
   1. Minimum Limits: $500,000 each occurrence; $100,000 passenger sub-limit.
   2. Required Evidence of Insurance: Certificate of Insurance.
8. Pollution/Environmental Liability Insurance  (Required if Tenant provides fuel service to others or engages in self-fueling
   1. Minimum Limits: ___________________ per pollution condition.  If Tenant maintains higher limits than the specified minimum limits, County requires and shall be entitled to coverage for the higher limits maintained by Tenant.
      Fill in limits from the Sonoma County Airport Summary of Minimum Insurance Requirements For Commercial Operators.
   2. The County of Sonoma, its officers, agents and employees shall be endorsed as additional insureds.
      We need to see a copy of the endorsement or an excerpt from the policy.  A statement on the certificate of insurance is not acceptable because the insurer is bound by the policy and endorsements, not by statements written on the certificate.
   3. If Tenant maintains higher limits than the minimums specified above, County requires and shall be entitled to coverage for the higher limits maintained by the Tenant.
   4. 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 County.  Tenant is responsible for any deductible or self-insured retention and shall fund it upon County’s written request, regardless of whether Tenant has a claim against the insurance or is named as a party in any action involving the County.
      Contact Risk Management 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 the deductible or retention.
   5. Coverage 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 Tenant’s policy, we want that policy to cover claims before any contribution from County’s Airport Liability policy, its pollution insurance or its self-insured retention. 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.
   6. The policy shall be endorsed to include a written waiver of the insurer's right to subrogate against County.
   7. Required Evidence of Insurance:
      1. Additional insured endorsement or copy of policy language granting additional insured status;
      2. Endorsement or policy language indicating that insurance is primary and non-contributory; 
      3. Subrogation waiver endorsement; and
      4. Certificate of Insurance.
9. Property Insurance for Business Personal Property and Tenant’s Improvements (Delete this section if this is an operating agreement with a subtenant.)
   1. Property insurance on a “special form” or “all risks” basis.
      “Special Form” or “All-Risks” means the property is insured for all losses unless the specific cause of loss is excluded. Some of the common exclusions are: earthquake and other earth movement, flood, wear & tear, lack of maintenance.
   2. Minimum Limit: the full current combined replacement cost of Tenant’s business personal property and Tenant’s improvements
   3. The insurance shall apply on a replacement cost basis, without deduction for depreciation.
      Replacement Cost means that the insurer will pay for property based on the current cost for new improvements, without subtracting anything for age, use or wear and tear.  Example: If carpeting installed five years ago is destroyed, the insurer pays for new carpeting of the same quality. The insurer does not subtract anything for physical depreciation.
   4. Tenant shall disclose any deductible or self-insured retention in excess of $25,000 and such deductible or self-insured retention must be approved in advance by County.  Tenant is responsible for any deductible or self-insured retention.
      Contact Risk Management 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.
   5. Required Evidence of Insurance: Certificate of Insurance or Evidence of Commercial Property Insurance. 
10. Standards for Insurance Companies
    Insurers shall have an A.M. Best's rating of at least A:VII.
11. Documentation
    1. The Certificate of Insurance shall include the following reference: [insert location or other identifier].
       Putting the location 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.
    3. The name and address for Additional Insured endorsements and Certificates of Insurance is: County of Sonoma, its officers, agents and employees, c/o Airport Manager, Charles M. Schulz – Sonoma County Airport, 2290 Airport Boulevard, Santa Rosa, CA 95403.
    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. Tenant shall provide immediate written notice if: (1) any of the required insurance policies is terminated; (2) the limits of any of the required policies are reduced; or (3) the deductible or self-insured retention is increased.
    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.
12. Policy Obligations
    Tenant's indemnity and other obligations shall not be limited by the foregoing insurance requirements.
13. Material Breach
    If Tenant fails to maintain insurance which is required pursuant to this Lease, it shall be deemed a material breach of this Lease.  County, at its sole option, may terminate this Lease and obtain damages from Tenant resulting from said breach.  Alternatively, County may purchase such required insurance and Tenant shall immediately reimburse County for any premium costs advanced by County for such insurance.  These remedies shall be in addition to any other remedies available to County.