The Danger For Landlords Letting Tenants Insure Their Buildings

The Danger For Landlords Letting Tenants Insure Their Buildings

Over and over again we hear about Landlords who allow their tenants to insure their buildings.

What is the danger for a landlord in allowing a tenant to insure the building?

One common issue which arises is where a clause in a lease requires the tenant to insure the building for loss and damage. We have seen repeated examples of situations in which the actions of the tenant when insuring the building has resulted in significant prejudice to the interests of the landlord.

These have included:

  • The tenant insured the building but selected a very large excess;
  • There was a non-disclosure by the tenant eg EPS, Fire Protection, which allowed the insurer to cancel the policy from inception;
  • The tenant, in breach of the terms of the lease, failed to insure the building for full replacement value and did not insure the landlord for loss of rent.

Case Study:

Another issue arose in a recent claim where the tenant was required by the lease to insure the building. The tenant insured the building in the name of the tenant and the landlord. The tenant intentionally set fire to the building and because of the way in which the policy had been set up, the insurer was able to deny the claim. It is much safer from the landlord’s perspective, for the landlord to insure the building and charge the tenant with the premium.

Published by Steadfast Lawyer: Michael White –

Adelaide Now   Sep 26, 2017 – A MAN has been arrested over a early-morning fire that destroyed one business and left two … Shops destroyed by large inferno in Adelaide.


Don’t leave your insurance questions unanswered, call M2M Risk & Insurance on Freecall 1800 24 33 12 or send us an email

Important disclaimer: The views expressed are those of the author only and do not necessarily reflect those of M2M Risk.  This article provides information rather than financial product or other advice. The content of this article, including any information contained on it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.   

No Comments

Post A Comment