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

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

November 29, 2017 Views: 1027
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What is the danger for a landlord in allowing a tenant to insure the building?

This Advisr Experts Opinion is brought to you by Patrick Selle of Arcuri & Associates Caroline Springs.  

One common issues which arises is where a clause in a lease requires the tenant to insure the building for loss and damage.

At Acuri & Associates, 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. So as a landlord, you need to be careful to ensure that you are adequately covered and in control of the insurance over your property.

Some of the issues that Landlords have faced include:

  • The tenant insured the building but selected a very large excess;
  • There was a non-disclosure by the tenant 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.

Landlord Insurance Case Study:

Recently, another issue arose in a 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.

In this case, then Landlord would have been much safer for them to have insured the building and charge the tenant with the associated insurance premiums.  

If you require professional assistance around your Landlords Insurance, connect with Patrick Selle.  

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Patrick Selle ABN : 22006299298, AFSL : 235409 , AR Number: 1259448

Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Patrick Selle.

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