Connect the policy to the property
Tenant improvements can include walls, flooring, ceilings, cabinetry, plumbing, electrical work, and other build-out costs. Ownership and insurance responsibility may depend on the lease and policy definitions. Both landlord and tenant should understand what each policy is intended to cover.
Risks to review
- Build-out values omitted from both landlord and tenant schedules
- Lease restoration obligations misunderstood
- Improvements insured using an unsuitable valuation method
- Property belonging to contractors, landlords, tenants, or customers confused
Information to prepare
- Executed lease and insurance provisions
- Build-out scope, original cost, current replacement estimate, and ownership
- Furniture, fixtures, equipment, signs, and stock by party
- Waivers, loss-payee requirements, restoration duties, and recent renovations
Frequently asked questions
Does the landlord's property policy cover a tenant's build-out?
Do not assume it does. Lease language, ownership, policy definitions, schedules, and limits should be compared.
Can tenant improvements be insured at replacement cost?
Possibly, subject to the form and conditions. Remaining lease term, repair, replacement, abandonment, and valuation provisions can affect recovery.
Coverage descriptions are general. Eligibility, availability, limits, deductibles, valuation, exclusions, and policy terms vary. Actual policy documents control.