Details of insurance will be clearly stated within the lease and will determine who is responsible for insuring what within a commercial property. Generally, this is a combination of landlord and tenant working in tandem to cover the property for which both have an interest.
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When leasing a property, the tenant will usually be responsible for the payment of the insurance premium, or an appropriate portion, to cover damage to the premises and any loss of rent the landlord may suffer if the premises become unusable. This effectively means that if the premises is damaged and a tenant is unable to utilise it for business, the tenant will not have to pay rent until the damage is repaired.
The lease should state who is responsible for arranging buildings insurance and paying the premium.
With most leases, the landlord will arrange and pay for buildings insurance but will then pass on the costs (or an appropriate proportion in a shared premises) either as part of the service charge or more commonly, as a separate itemised charge. Tenants can ask to see a copy of the cover to ensure that it is adequate and in line with what is being charged.
Other insurances, such as contents and employers’ liability insurance may also be required. Even where a landlord arranges buildings insurance, the tenant may want to ensure that their own insurance includes cover for any losses from business interruption caused by problems with the building.