A lease contract requires the agency to indemnify the lessor for “all claims whatsoever” which may arise during the period of the tenancy. What should we do?
The Fund will, subject to the payment of any excess, cover public liability claims relating to the agency’s own legal liability in tort or statute. The Fund will not, however, cover other parties (such as the lessor) purely against their own legal liability. Therefore, before agreeing to any “hold harmless” provisions in a lease contract, the agency should consider whether the lessor is requiring the agency to indemnify them only for the agency’s negligence or for the lessor’s negligence as well – the latter will not be automatically covered by the Fund. By negotiation, the agency should try to have the lessor contractually accept the risks that they are in the best position to control (eg inherent building defects). The Fund Administration Agent, Marsh Pty Ltd or Crown Law can provide assistance with any such complex insurance requirements.
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