Risk allocation issues in commercial leases

Abstract

This paper discusses the issues and challenges when addressing casualty and insurance issues in a com-mercial lease. It tries to draw readers to use a ‘hub and spokes’ method in negotiating these clauses by tying them together into a cohesive negotiation. It also discusses the steps in developing a ‘no fault’ indemnification scheme for handling allocation of risks in insurance and avoiding subrogation claims following a casualty. In a related but slightly different topic than the more technical dis-cussion of casualty and insurance issues discussed beforehand, the author also updates readers on recent de-velopments in US federal legislation that provide a ‘backstop’ for insurers and underwriters to address the deep strain on these industries’ assets following a catastrophic event such as the Septem-ber 11th attacks.