A critical distinction when looking at what a building insurance will cover for damage to a tenanted property, is what parts of the building are covered, which can be different to what the tenant is directly responsible for under their lease. This may come across as unnecessary detail when it comes to insurance covering a claim for damage, but it’s amazing what confusion it can cause.
Let’s take an example of a block of flats, where in actual fact the tenant owns an individual flat through a long lease, something I came across a few years ago. Now assume a break-in as they are unfortunately are on the ground floor, where a side window is broken and the burglars gain entry to steal a TV.
3 Stages to Get Right
In terms of who carries out the repair and processes an insurance claim, you need to break this down into three stages:
1. Make a Building Insurance Claim for Damage to Obvious Parts of the Building
Fundamental fixtures like windows, doors, canopies, and even kitchen and bathroom suites, are all classed as part of the main building, therefore the building insurers should be able to process a claim.
You therefore just need to confirm who administers this, for example the managing agent or landlord, and what the insurer’s requirements are for processing the claim, for example if so many quotes are needed, and any excess payment to be paid.
2. Check Who is Actually Responsible for the Damaged Part of the Building Under the Lease
Now, this is where things get interesting, because in this instance the tenant was actually responsible for the window and glazing under their lease. So here then lies the predicament – on one side the landlord may need to process a building insurance claim, but on the other the tenant (not the landlord) is unfortunately liable as well.
To put in another way, the window belongs to the tenant, and a landlord can’t necessarily barge in and repair, although as a separate matter they do arrange insurance cover for it. So in this situation, the tenant had to arrange their own temporary board-up repair for the window, as the insurers could not respond quickly enough.
This means the tenant had to pay for it, and separately recharge it through a claim, as the landlord technically couldn’t enter in and do it for them, or rather in this example the management company through the communal service charge.
3. Remember Any Damage to Tenant's Own Contents, Fixtures, and Fittings, That May Need a Separate Contents Insurance Claim By Them
So in this case, it was not only the TV but the curtains and even curtain rail affected by the damage.
Similar to building insurance, there is probably an excess payment to pay and the risk of premiums being affected by a claim, and therefore it may not be worth actually processing a claim in the end.
Considering Them All Together
Unfortunately these things are never so easy, hence the importance of making sure the building insurance, lease, and content insurance liabilities are clearly understood and actioned. In reality it’s best to work with a landlord, tenant, managing agent, insurance broker, contractor, and any other parties to make sure things are still as smooth running as possible in the meantime.
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