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Insurance and Repairs

QUESTION: “I am a tenant of office premises that have been damaged by a risk against which the landlord has not insured. The landlord says I must repair the damage. Is this right?”

You NEED to check the terms of the lease to establish your position. Usually a landlord will insure against a wide ranging set of risks and recover the premium from the tenant. However, it could be that your landlord should have insured against the risk in question but has not, and is in breach of its obligation to insure. The landlord therefore may still be liable to reinstate in the usual way and, depending on what the lease says, make up any shortfall insurance proceeds out of its own pocket.

However due to recent events, such as the extensive flooding across the UK, it is becoming increasingly difficult for landlords to insure against certain risks that cannot be reasonably insured against on satisfactory terms. In such cases, your landlord would not be required to reinstate, and the risk would lie with you as the tenant. Rent would continue to be payable and you may be required to repair such damage under your repairing covenant.

Tenants should bear this in mind at the outset of lease negotiations and attempt to cover their position. One approach could be to exclude damage caused by uninsured risks from the tenant repairing obligation, ensuring a suspension in rent and giving the landlord the option of either reinstating the premises or terminating the lease.

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