J. Insurance

• Library: Practical Guide to Commercial Real Estate in South Carolina (SCBar) (2012 Ed.)

J. Insurance

1. In General

Insurance provisions are placed into contracts to protect parties against the risk of loss. It is important for the parties to make sure that the insurance provisions are coordinated with any waivers of subrogation, indemnity provisions, and restoration provisions in the lease. Typically, leases will require casualty insurance, consequential loss insurance, and general liability insurance.

2. Casualty Insurance

Casualty insurance protects against direct damage to the leased premise. It usually covers damage caused by such occurrences as windstorms, smoke, earthquakes, vandalism and theft. Recovery under this type of insurance is usually limited to the insurable value or actual cash value of the property. Insurable value is typically the actual replacement cost on the date of the loss, less the property's depreciation. There may be a coinsurance provision, and if it is not satisfied (if the insurance maintained is less than the stated percentage of the...