Essentially a pipe burst on the third floor causing damage to our client's space on the first floor. The landlord has agreed to provide building insurance to our insured, but the insurer believes that our policy should be insuring the paint, wallpaper and other improvements that are permanently attached.
I included the lease because it is relevant in this scenario, it states building insurance should be provided by the landlord, also states the landlord is responsible to repair floor, walls, etc., but also states tenant should repair their alterations, additions and improvements and/or fixtures introduced to the leased premises.
My question is: If they have been paying the landlord to provide building insurance could they not theoretically collect from the policy the landlord is proving them with in order to repair their alterations, additions and improvements and/or fixtures introduced to the leased premises? Specifically, wallpaper and paint that is permanently installed and will become part of the building when the premises is vacated by them after their lease?
Pennsylvania Subscriber
In reviewing the policies, both policies are identical and provide the same coverage. The coverage delineated below refers back to what each party is contractually obligated to insure. The building owner only has a use interest in the tenant's improvements and betterments until such time as the tenant moves out and is no longer a tenant. Since the improvements and betterments are still within the tenant's control at the time of the loss, then the tenant's policy will cover the loss. If the tenant had already moved out, then the building owner's policy would cover the damage.
1. Personal property pertaining to your business, professional or institutional activities, including leased property for which you are contractually responsible; 2. Personal property of others that is in your care, custody, or control; 3. Labor, materials, or services furnished or arranged by you on personal property of others; 4. Your use interest as a tenant in improvements and betterments. Improvements and betterments are fixtures,alterations, installations, or additions:
a. Made a part of the building or structure you occupy but do not own; and
b. You acquired or made at your expense but cannot legally remove;
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.