When a tenant makes permanent improvements to a leased building, the improvements usually become the property of the building owner. The tenant gains the ability to use and enjoy the improvement or betterment during the period of the lease.
Examples of improvements could be air conditioning, office partitions, lighting fixtures, or special electrical or plumbing installations necessary to run your business.
The commercial property policy defines improvements and betterments as “fixtures, alterations, installations or additions that are made a part of the building that is occupied but not owned by the named insured, and the named insured acquires or makes at his expense but cannot legally remove.”
If there is a loss and the improvements are damaged, what has the tenant lost if the building improvement actually belongs to the building owner?
The tenant has lost the “use interest” in the improvement. It is a possible loss of use of the improvement that gives a tenant an insurable interest.
Coverage for improvements and betterments are automatically included since the business personal property section of the commercial property policy actually refers to a named insured’s “use interest” as tenant in improvements and betterments.
It is important when determining a limit for business personal property to consider the value of improvements and betterments.
An independent agent from Hubbard Insurance Agency can help you make an informed decision, and we provide business insurance to Rocky River and all of Ohio. We care about our clients and take the time to find the best deal for commercial insurance that truly suits their needs.
At Hubbard Insurance Agency, we consider ourselves the friendliest insurance agents on the planet. You can contact us by email, phone or by filling out our online form. We will make the process easy for you, and we care!
Source: Inside Insurance