Tenant's Insurer Can't Deny Coverage to Building Owner

A tenant leased a building. The tenant's insurer issued to the tenant, as the named insured, a commercial property insurance policy covering the building. The building's owner was not named in the policy. However, the tenant's insurance broker issued a Certificate of Liability Insurance, identifying the owner as the “certificate holder.” And the Certificate of Liability Insurance stated that the certificate holder was a named loss payee/additional insured under the policy.

The building suffered major damage from a ceiling collapse. The owner made a claim under the tenant's policy, but the insurer denied coverage. The owner sued the insurer, claiming that it, the owner, was entitled to coverage under the policy. The insurer asked the court to dismiss the lawsuit.

A federal court in California refused to dismiss the lawsuit. The court examined the lease and noted that it required the tenant to obtain and maintain the insurance policy for the benefit of the owner, and that proceeds from that insurance were to be paid to the owner. Plus, the insurer issued a Certificate of Liability Insurance that expressly stated that the owner was the loss payee/additional insured under the policy.

Therefore, the owner's claim, along with the Certificate of Insurance, was enough to prevent the lawsuit's dismissal, said the court.

• Kantorovich v. Philadelphia Indemnity Ins. Co.: Civil No. 06-CV-1164-L(LSP), 2006 U.S. Dist. LEXIS 87243 (U.S. Dist. Ct. S.D. Cal. 12/1/06).