Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 22
22 Guidebook for Developing and Leasing Airport Property
requirements, at a minimum, should outline coverage types and amounts so that the airport is
protected from financial liability. These requirements will vary based upon the type of tenant
(e.g., private versus commercial enterprise), the ownership of the physical structures and equip-
ment (e.g., airport sponsor or lessee), the scale of the operation, and the relative risk of harm or
loss based upon the type of enterprise. Typical insurance coverage will include (depending upon
lessee, ownership of improvements, and anticipated activity):
· Property (structure and/or contents),
· General liability or commercial general liability,
· Automobile,
· Fire,
· Liability, and
· Environmental.
The level of coverage required can be set by the airport sponsor or may be assigned by state or
local authorities. Excessive coverage requirements may present an undue financial burden on
airport tenants and warrants consideration when setting minimum levels. In September 2008,
Airports Council International North America (ACI-NA) surveyed concessionaires at commer-
cial service airports of all sizes (ACI-NA Phase II: Concessionaires Survey), focusing on insurance
and risk management issues. The report was completed within the past few years and may be a
useful resource to the reader of this Guidebook when setting insurance levels. The survey results
reveal the various types of insurance an airport should contemplate (e.g., property, general liabil-
ity, auto, and fire) as well as minimum amounts for the various categories prevalent at air-
ports across the country. The survey report also considers airports of different sizes. Surveys
such as these provide relevant benchmarks for the airport sponsor when establishing mini-
mum levels of insurance coverage. Because an airport sponsor must balance the need for pro-
tection of its interest with the real costs imposed on tenants and airport users, establishing
appropriate levels of insurance coverage is an important topic that has direct consequences
to the tenant's ability to maintain a successful business venture. Being consistent with like
airports, without leaving the airport sponsor unreasonably exposed to risk, is a responsible
approach to finding that balance.
If the airport sponsor is the owner of the physical improvements on the land being leased (either
through new construction funded by the airport or by means of reversion due to the termination
of a lease agreement), the airport may be responsible for premises insurance. An umbrella policy
may be the most effective approach, though liability, contents (e.g., aircraft and/or equipment),
and other stipulated hazards such as environmental contamination generally remain the respon-
sibility of the tenant.
It is the responsibility of the airport sponsor to ensure that the lessee and any sublessee are
in compliance with the insurance requirements outlined within the lease. This is typically accom-
plished by requiring the lessee to provide airport management with appropriate insurance doc-
umentation (Certificate of Insurance) on an annual basis from a reputable insurance firm licensed
to do business in the state in which the airport is located. The lease agreement may include language
that requires the lessee to notify the airport of the cancellation of insurance, within a stipulated
time frame, should such an event occur.
2.2.16 Environmental
Environmental awareness and consciousness has risen significantly in past decades within many
facets of modern life. Real estate, and more specifically, leased airport property is no exception.
In fact, environmental consideration is now routinely a point of significant discussion in lease
negotiations.
