Landlords Be Careful Accepting Insurance Certificates

In negotiating leases, a standard requirement of landlords has been to require a certificate of liability insurance, naming the landlord as an additional insured on the tenant’s policy.  The lease would typically state that the tenant shall name the landlord as an additional insured on the tenant’s liability insurance policy and deliver an insurance certificate to the landlord stating that the policy will not be cancelled or altered without a specified number of days’ prior written notice to the landlord.

The form of insurance certificate provided by the tenant was usually the “ACORD Form 25 Certificate of Liability Insurance.”  In the past the form stated that if any of the described policies are cancelled before the expiration date, the issuing company will endeavor to mail 30 days’ written notice to the certificate holder, but failure to mail such notice shall impose no obligation or liability on the company, its agents or representatives. Sometimes the insurance agent would modify this clause to make the notice mandatory (as opposed to agreeing to “endeavor” to give notice without liability for failure to do so).

Effective September, 2010, ACORD revised the Form 25 Certificate of Liability Insurance, which now states as follows:  “Should any of the above-described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.”

Therefore, a landlord can no longer rely upon the language of the ACORD 25 insurance certificate for assurance that the landlord will receive notice of cancellation of the liability insurance policy.

What is the landlord to do?  If any party in addition to the first named insured on the actual liability policy (the tenant in our case) desires a copy of a cancellation notice in the event the policy is cancelled, that party should be expressly endorsed onto the policy as a cancellation notice recipient.

Another possibility: in appropriate circumstances, the landlord may carry the liability policy, add the tenant as an additional insured and either require the tenant to reimburse the landlord for insurance premiums or include the cost of those premiums in the rent.  This allows the landlord to make certain that premiums are always paid.


– Stu Cohen

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