Insurance 101

Every provision of a lease or contract is either (a) restating the rule that would be supplied by the court in the absence of the provision (the “common law”) or is supplied by statute or (b) is expressly shifting a risk from one party (the “protected party”) to the other (the “protecting party”), to the extent permitted by common law and statute. The most common method of risk management are through contractual provisions for (1) indemnity, (2) insurance and (3) waiver of subrogation (aka the “three legged stool”). Neglecting any one of these three risk management legs may result in a failed risk management program.