Commercial properties can contain substantial improvements and fit-outs installed by either the landlord or tenant.

It is important to establish who owns these items and who is responsible for insuring them.

What are tenant improvements? #

Examples can include:

• Internal walls.
• Flooring.
• Built-in cabinetry.
• Air-conditioning modifications.
• Electrical works.
• Lighting.
• Ceilings.
• Specialist fit-outs.
• Other improvements made to leased premises.

Does the landlord’s Building Insurance automatically cover them? #

Not necessarily.

The definition of Building varies between policies.

Some improvements can fall within the landlord’s building definition, while others may remain the tenant’s property.

Can the tenant insure its own fit-out? #

Yes.

Tenants often insure:

• Contents.
• Equipment.
• Stock.
• Tenant improvements.
• Their own fixtures and fittings.

The appropriate arrangement depends on the lease and policy wording.

Why can duplication or gaps occur? #

Problems can arise where both parties assume the other is responsible.

For example:

• Neither party insures a major fit-out.
• Both parties insure the same property.
• The building value excludes significant improvements.
• Lease responsibilities change but insurance is not updated.

What should property owners do? #

Review:

• The lease.
• Building definition.
• Current property valuation.
• Tenant fit-outs.
• Landlord improvements.

Tell Webber Insurance when major alterations or fit-outs are completed so the building sum insured and property definitions can be reviewed.