Self Insured Lessee Must Defend Lessor

Read the full article at https://www.linkedin.com/pulse/lessees-agreement-self-insure-lessor-treated-like-zalma-esq-cfe and at https://zalma.com/blog plus more than 3800 posts.

Contracts, like leases, often determine who is stuck with the obligation to defend and/or indemnify against bodily injuries occurring on the leased premises. This is usually accomplished by requiring the lessee to acquire liability insurance naming the lessor as an additional insured. In Anthony Foti and Cristina Foti, his wife v. JG Elizabeth II, LLC D/B/A The Mills At Jersey Garden Mall et al, No. A-1638-19, Superior Court of New Jersey, Appellate Division (July 2, 2021) the lease required JG Elizabeth (Elizabeth) to self-insure the risk and refused to defend.

ZALMA OPINION

The Appellate Division treated the lease’s agreement to allow the tenant to replace the requirement for insurance in the lease with its self-insurance program. It then interpreted the lease provision as if it was an insurance policy which, necessarily, would have provided for a defense. If the parties wanted the agreement to be limited to indemnity only, they could easily have included that language in the lease. Sloppy contract language resulted in unnecessary litigation.