Commercial Tenant and Insurance Claim?

Commercial Tenant and Insurance Claim?

15:10 PM, 16th March 2022, About 2 years ago 20

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Our tenant had an attempted burglary and the shop door needs to be replaced but has to be made to fit as it is not a standard size. We as the owners of the property will probably have to go through the insurance to cover this.

The contract is not very detailed, which is an error on my behalf, but it is what it is. As it stands, we pay the buildings insurance and the tenant does not contribute towards this. The tenant paid £250 at the time for the Police to secure the property, so he is looking to get this back and looking to us to pay this.

Surely we are not liable to pay for this?

If the culprit is charged, shouldn’t the tenant be looking to seek this from him?

If I negotiate a new contract at a later date with the tenant and ask him to pay towards the insurance, how does it stand in the event of a similar issue in the future?

Does the excess (In the event of a claim) need to be paid by the tenant or the Landlord?

Many thanks


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Jason McClean - The Home Insurer

17:16 PM, 16th March 2022, About 2 years ago


The devil will be in the detail of the tenancy agreement reference who pays what. However, anything structural on the building that you own is normally your responsibility and for you to insure, repair and maintain.

As the tenant has no ownership of the building, it would not be usual for him to pay the insurance - that is your cost protecting your asset.

I would suggest you speak with your insurer's claims line, explain what has happened and see if the £250 can be reclaimed or not as part of the overall claim.

It is your policy, so you are liable to pay the excess; the tenant is not the insured party and has no financial interest in the property.

Moving forward, however you structure the costs and tenancy is up to you, but the insurance should be in your name as you are the owner of the building. If the tenant insures in his name, then with no insurable interest, it could easily be worthless in a claim.

I do hope this helps.



Rob Crawford

10:02 AM, 17th March 2022, About 2 years ago

A good response from Jason. Did the tenant try and contact you before committing to the police repair? Was the tenant at the property when the police arrived? Essentially it sounds like he/she acted responsible in securing the property. I don't see that your insurer would have an issue with payout for these costs. You will need to reference the police case number and possibly get a witness statement (if not already given to the police) from your tenant. Also estimates for the new door. A loss adjuster may want to see the damage, but I suspect in the grand scheme of things, it's quite a low value claim to them. Would your future premiums increase for future cover, possibly! The policy excess that you have to contribute may make it too low a value claim to make it worth while. In which case I suspect you will have to foot the cost.


13:11 PM, 17th March 2022, About 2 years ago

As standard procedure, all of my tenants pay for the building's insurance in my full repairing and insuring leases. Logic says that it is them that is causing the risk, in many cases.
The leases state that the LL is responsible for the repair of the building structure which in many cases can be claimed from the insurance company. With all non-claimable expenses paid for by the tenant.

Simon M

14:00 PM, 17th March 2022, About 2 years ago

Reply to the comment left by neilt at 17/03/2022 - 13:11
Similar to NEILT I understood commercial properties were usually full repairing lease, so includes building insurance, electrical compliance, etc. Perhaps not if there are flats above you let separately.

I don't rely entirely on the tenant, so I sort out the policy, give the tenant an opportunity to check before I buy it. No tenant has ever checked, and they reimburse as reliably as they pay rent.

Graham Bowcock

16:22 PM, 17th March 2022, About 2 years ago

Your starting point has to be the lease.

If the lease is silent on such costs, then the repair done by the tenant ought to be reimbursed by the landlord. However, it should be claimed on the insurance.

Many leases (but not all) are FRI, so the tenant reimburses the landlord the cost of the insurance. However, you still need to agree how non-insurance costs are dealt with.


9:36 AM, 19th March 2022, About 2 years ago

Reply to the comment left by Jason McClean at 16/03/2022 - 17:16Entirely incorrect!


9:44 AM, 19th March 2022, About 2 years ago

Any commercial property landlord should require that their tenant enters into a FULL REPAIRING AND INSURING LEASE. The tenant reimburses the landlord for the building's insurance. The tenant pays for all costs not covered by the insurance. It is also advisable for the tenant to purchase Tenant Liability Insurance.


9:51 AM, 19th March 2022, About 2 years ago

Reply to the comment left by boble at 19/03/2022 - 09:36
Sorry Jason McLean, you're completely wrong I'm afraid.

Graham Bowcock

17:46 PM, 19th March 2022, About 2 years ago

Reply to the comment left by boble at 19/03/2022 - 09:44
It's not always possible to get an FRI lease. It's easier with standalone properties, but many smaller investors own multi let units where there may be two or three units (perhaps a retail, office and couple of flats). You can try to get to an "effective FRI" by building in service charges, but if there are any shared parts of the building you can't really make a single tenant pay for it in the first instance.

FRI is also a commercial consideration for the tenant. If I was to rent a building in very poor condition, I'd be wary about taking a full FRI. You can't force an FRI if the market/property doesn't warrant it.

Graham Bowcock

17:50 PM, 19th March 2022, About 2 years ago

Reply to the comment left by boble at 19/03/2022 - 09:36
Is he "entirely incorrect" or is it the case that specific parts of his response would benefit from further clarification.

His opening about checking the lease is 100% correct.

I would also agree that the landlord has the insurable interest.

I don't even think that the central part of the answer is wrong, but it could depend on what has been agreed with the tenant.

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