Landlords and tenants should always be thinking about the
relationship between an obligation to insure and a lease's
indemnity clause so that the risk, should the "Premises"
be damaged, is allocated as the parties intended.
Generally, where insurance is obtained for the benefit of one
party, the obligation to insure operates as a waiver of liability
in favour of the other party. However, in one recent case
Deslaurier Custom Cabinets Inc. v 1728106 Ontario Inc., 2014 ONSC
5148 ("Deslaurier"), the Ontario Superior Court of
Justice held that a tenant's covenant to insure may be limited
by express provisions in the lease.
In Deslaurier, 1728106 Ontario Inc. (the "Landlord")
entered into a lease with Deslaurier Custom Cabinets Inc. (the
"Tenant") to carry on the business of manufacturing and
sale of custom cabinets in Units 4, 5, 11, 12, 13, 14, and 16 of
the Building, containing a rentable area of 95,090 square feet (the
"Premises"). As a condition of the lease, the
