September 28, 2016

Water damaged a commercial building that is being rented to a tenant. The water damaged the old part of the building and the tenant’s improvements and betterments.

What policy pays for the building damages (that the tenant never altered) and the building damages to the tenant’s improvements and betterments?

I say the landlord’s building coverage pays for any building damages that are not the tenant’s improvements and betterments and the tenant’s business personal property coverage pays for the damages to the building improvements and betterments. Do you agree?

Ohio Subscriber

The tenant is entitled only to its use interest in the improvements and betterments if they were made at the tenant’s expense but cannot be removed because they have been made part of the building or structure. The building owner’s insurance pays for the actual damage to the building, including the improvements and betterments that are part of the building, unless the tenant was required by the lease or another agreement to insure the improvements and betterments.

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