Now serving as a volunteer faculty member for the Big “I” Virtual University “Ask an Expert” service, I recently received this question from a Pennsylvania agent:

“We typically, if not always, see Damage To Premises Rented to You or Fire Damage Legal Liability (FDLL) in our contractual requirements between a GC and Sub. I understand why this would be a requirement for landlord/lessee relationship, but why is this coverage typically required in a GC /Sub relationship? Is the answer as simple as because it is typically part of the general liability policy so why not include it in the requirements?

My response:

FDLL coverage is an option in the ISO CGL policy. It is used most often when a triple net lease has an insurance requirement that makes the tenant responsible for insuring damage to rented premises. For more information on the general worthlessness of this coverage even to tenants, check out this blog post.

As valueless as FDLL often is, it is utterly worthless and without merit when made a part of an insurance requirement for contractors at a work site they do not normally occupy. I’ve seen FDLL requirements higher than the value of the entire building a contractor is working on. In one case, a guy with a snow shovel being paid $75 to remove snow from a small strip shopping center was required, in addition to other ridiculous things, to provide $50K in FDLL coverage.

So, why is FDLL coverage so often required in the insurance section of a work contract for a plumber, electrician, parking lot paver, etc.? The answer is simple: Because the people writing the requirements don’t know what they’re asking for.

Often, this requirement originates from a landlord, say, of a strip shopping center where there are tenants with FDLL requirements. So, when the landlord hires a contractor to work on the building or repaint white lines on the parking spaces, whomever drafted the lease insurance requirements simply follows the lease language for the contractor’s insurance requirements. A plumber, electrician, etc. contractor has no need to provide evidence of FDLL coverage to a landlord hiring him to do work on the premises (unless he also rents space there).

If you are a Big “I” agent with access to their Virtual University, search the VU for “FDLL” for more info. While you’re at it, search the VU for “triple net” to see why I refer to triple net leases as the spawn of Satan.

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information