Tenant’s insurance issues—risks
Tenant’s insurance issues—risks

The following Property practice note provides comprehensive and up to date legal information covering:

  • Tenant’s insurance issues—risks
  • Insured risks
  • Uninsured risks
  • Property owners' liability
  • Mixed use properties
  • Cost

Tenant’s insurance issues—risks

Insured risks

It is in the tenant’s interests to ensure the landlord covenants to insure against as comprehensive a range of risks as possible as:

  1. an unqualified covenant to repair will require the tenant to rebuild the property if it is destroyed, but in practice most landlords accept that the tenant's repairing covenant should provide that the tenant does not have to rebuild or repair where the damage is caused by an insured risk (as it will fall to the landlord to repair this damage using the insurance monies)

  2. usually payment of the rent is only suspended if the property is unfit because of damage caused by an insured risk

  3. a tenant’s right to terminate may apply only where the damage was caused by an insured risk

If the landlord only covenants to insure against a narrow range of risks and the property is destroyed by an uninsured risk, neither the proviso to the repairing covenant, the suspension of rent provision, nor the termination right, will apply:

  1. the tenant will have to repair (and rebuild where there has been total destruction) unless the exception in the repairing covenant extends to uninsured risks

  2. the rent will not be suspended unless the rent suspension clause also operates where the premises are damaged or destroyed by an uninsured risk, and

  3. the tenant will be unable to terminate

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