LANDLORDS NOT TENANTS SHOULD OBTAIN & MAINTAIN REQUIRED INSURANCE COVERAGE
Case Study: A landlord while seeking to obtain freight rail service to and from its industrial business park which includes rail spurs for each tenant learned that the railroad required it to obtain and maintain insurance before rail service would be provided. The landlord objected to providing the insurance based upon the following:
- It’s not seeking rail service for itself, but for its tenants.
- It assumes no liability for the operations of its tenants.
- Therefore, the railroad should obtain the insurance directly from its tenants, not the landlord.
Railroads have a right to expect a landlord, not the landlord’s tenants, to provide the insurance for the following reasons:
- Railroads have no control over a landlord’s tenants.
- Railroads are not made aware of tenant changes on a timely basis, if at all.
- It’s the most cost-effective way of obtaining and maintaining the insurance. When a landlord obtains the insurance, and also requires the same insurance from its tenants, it permits the landlord’s insurer to deeply discount their insurance premiums because theirs becomes a “tenant” or “secondary” exposure providing a pyramid of coverage lowering the insurer’s
exposure to risk of loss.
All parties must be made aware that most litigation between landlords and railroads result from operating trains on track which the railroad didn’t install and which the railroad doesn’t maintain. Inspecting the track before use helps, but does not eliminate the problems, and ferreting out the cause of the injury or property damage following an accident can be impossible.
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