Tenant improvement insurance

Our thanks to Rajan Amin from Coversure Croydon for this informative article about tenant improvement insurance and the benefits it can provide for commercial tenants making improvements to their leased property.

Tenant improvement insurance: what every commercial tenant needs to know

In our line of business we meet a lot of commercial tenants, from office based to retailers and wholesalers to web designers.  Invariably they are all concentrating on growing their respective businesses and keeping a keen eye on overheads – insurance being one of them.

We take pride in informing and educating our clients to the wide range of covers available under even standard policies and, in particular, tenant improvement insurance, which is met with a blank expression.  ‘Tenant improvement insurance, what’s that?’  I’m often asked.  ‘That’ I reply ‘could save you an awful lot of money and ensure you continue to trade…’  Allow me to explain.

What is tenant improvement insurance?

In leased commercial property – such as an office, shop or restaurant – you as the tenant may wish to make amends or improvements, a new kitchen or a meeting room for example.  While such improvements may be part of the building once completed, they are technically owned by you as the tenant, even though you cannot take them with you when you leave.

This raises an insurance issue in the event of a claim and this is where tenants’ improvement insurance comes in, as it specifically covers such improvements.  The cost of such insurance is often negotiated between the lessor and the lessee, and is usually documented in the lease agreement.

Who needs tenant improvement insurance?

This type of insurance has been created to cover commercial tenants that have works done to leased commercial properties.   With more and more businesses wanting to put their stamp of individuality on their premises, such works are increasingly common and often are a huge initial cost to the business.

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What are the benefits of having tenant improvement insurance?

With tenants’ improvement insurance in place, commercial tenants are covered for improvement costs in the event of an insured event e.g. a fire, flood, theft etc. to allow them to put the property back in the state it was before the incident.

Not having the cover could leave a commercial tenant under-insured and could even affect the ability of their business to continue trading.

What do you need to look for in tenant improvement insurance?

When considering whether to include tenant improvement insurance within your policy, it’s always worth looking to:

  • Check the lease to see who is responsible for what in terms of insurance and tenants’ insurance, especially if you are having works done
  • Break down the sums insured between ‘trade contents’ – items that can be carried out of the property, and tenants’ improvements – physical changes to the property that are permanent e.g. ceilings, lighting, floors, partitions, AC installation etc. This is important as it could save you money as both are rated differently by insurers as they each carry a different level of risk

Like to know more about tenant improvement insurance?

I hope this article has opened your eyes to the importance of tenants’ improvement insurance.  As I said at the outset, it’s a lesser known area of business insurance but it is one that is well worth knowing about.

If you would like to know more we would be happy to chat it through with you. Call us on 020 7998 0102 or send us an email

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