Commercial Landlord Insurance

Usually the landlord, because the landlord holds the capital value, with the premium recovered from the tenant under the lease as insurance rent. The lease says so in its insurance clause, along with the risks the landlord must insure against and how long the rent is suspended after damage. A tenant insuring the building itself is unusual and needs a lease drafted for it.

The list of perils the lease obliges you to insure against: typically fire, lightning, explosion, storm, flood, escape of water, impact, riot, malicious damage, subsidence and often terrorism. The policy has to name each of them. A risk on the lease but excluded or capped on the policy is the landlord’s own loss, and many leases require you to reinstate regardless.

Enough to cover the rent the lease suspends, for the whole period it suspends it. Leases commonly suspend rent for the shorter of reinstatement or the loss of rent cover, most commonly three years. On the wordings read the indemnity period is whatever your schedule says, so where the lease fixes the suspension at three years a twelve-month item leaves two years the tenant need not pay and the policy will not. Include service charge and insurance rent if the lease suspends those too.

No. On the wordings read for this page loss of rent pays only in consequence of insured damage to the building. A tenant in arrears, a tenant that goes into administration, a break clause exercised early or a rent-free period you agreed are not damage. On the wordings read, loss of rent is written around insured damage; cover for tenant default is a separate product.

Not where the tenant contributes to the premium. In Mark Rowlands v Berni Inns, reported in 1986, the Court of Appeal held that where the landlord covenants to insure and the tenant pays towards it, the insurance is for the benefit of both, so the insurer cannot pursue the tenant even for a negligently caused fire. One wording read writes that waiver into the policy for any tenant who contributes to the cost of insuring.

A clause, on four wordings read, that the policy is not invalidated by an act, omission or alteration unknown to you or beyond your control that increases the risk, provided you tell the insurer once you become aware and pay any additional premium. One wording read writes it specifically around the act of your tenant. It protects you from what the tenant does behind your back, not from what you knew and did not report.

Yes. A new tenant in a different trade is a change of risk. Three wordings read make notification of a material change a condition in its own right, and the Insurance Act 2015 duty of fair presentation applies to every commercial policyholder. The wordings read also require notice when a building becomes unoccupied: as soon as you are aware on one and immediately on another.

Cover narrows after 30 consecutive days on two wordings read, 45 on two and 90 on one. Theft, escape of water and malicious damage typically drop out unless the building is inspected inside and out every week with a log, services are turned off except for alarms, and waste and combustibles are removed. In England the business rates relief on an empty commercial property runs three months, six for industrial premises, which is longer than any of the day counts.

Five wordings read note other interests: tenants, lenders and contracting purchasers. Some do so automatically once you declare the interest; two do so only if you disclose the names at the point of a claim. Most leases require the tenant’s interest to be noted, or in some cases the policy to be in joint names, so check which the lease asks for and which the wording gives.

You can be. Where the lease puts repairs on you, or gives you the right to enter and repair, the Defective Premises Act 1972 makes you owe a duty of care to anyone who might be affected by a defect in the premises. The tenant, usually the occupier of the let space, owes the common duty of care to visitors under the Occupiers’ Liability Act 1957; you remain occupier of any common parts you keep. Property owners’ liability answers for your side.

No statute requires the buildings cover. The lease will, and a lender will for any charged building. The law does require employers’ liability if you employ anyone, at a minimum of £5 million under the 1969 Act and the 1998 Regulations made under it, and, from 1 April 2023, an EPC of at least E to continue a non-domestic let in England and Wales unless an exemption is registered. The fuller answer is on our commercial property insurance page.

On a full repairing and insuring lease, yes, as insurance rent, including the Insurance Premium Tax charged at the standard rate of 12 per cent. That is a reason to insure accurately rather than generously: a tenant can query the insurance rent, some leases limit it to a premium properly incurred, and a sum insured or a loss of rent period above what the lease and the rebuild cost support is premium the tenant is paying for cover that never pays.

Then you must buy it, because terrorism is excluded for commercial property on every wording read and is bought back as a separate section. Under the Pool Re rules it is bought for all of a policyholder’s eligible property or none, so the decision reaches every building on your insurance. If the lease does not list it, the decision is yours, and the tenant’s own business interruption cover may depend on it.

Yes. Where a residential leaseholder pays towards the premium, FCA rules in force since 31 December 2023 treat them as a policy stakeholder: the broker must disclose its commission and cannot be paid in a way that conflicts with their interests. The residential unit also carries its own unoccupancy period on one wording read. That building sits on our mixed-use property insurance page.

The responsible person for the premises under the Fire Safety Order in England and Wales, which for the let space is usually the tenant and for the common parts of a multi-let building is usually you. Scotland has the Fire (Scotland) Act 2005 and Northern Ireland the Fire Safety Regulations 2010. Insurers do not enforce it, but their conditions and their liability cover assume it has been done.

Only if the lease requires it. Joint names gives the tenant a direct interest in the proceeds; a noted interest gives the tenant recognition without control. Either way, where the lease makes you insure and the tenant contributes to the premium, the insurer generally cannot recover from the tenant. Ask the broker which the wording offers, because five wordings read note interests and not all of them will write joint names.

The building, with construction, year, roof, listing status and a current rebuild value; the tenant, with trade, lease term and any subletting; the rent and the period the lease suspends it; five years of claims; anything empty and since when; and the lender to be noted. The property type starts the form; the lease is what the broker turns into the schedule.

Because no figure would be true for you. A let building is priced on its rebuild value, its construction, its postcode, the tenant’s trade, the rent and the period it is insured for, and the claims record, in combinations no average captures. If we publish data of our own one day, it will carry a sample size and a date.