Landlords And Tenants ‘Must Learn Insurance Lessons From Flooding’

Legal Expert Offers Advice Following Severe Weather


The adverse weather and flooding which struck the UK should serve as clear warning to landlords and tenants that they need to have their insurance in order, according to a property litigation specialist at Irwin Mitchell.

A number of areas suffered serious flash flooding and similar problems as result of extremely heavy rain across the past month, with many commercial premises and contents suffering significant damage during the devastating conditions.

Danny Revitt, an expert in property litigation at Irwin Mitchell, said the issue had raised major questions for both landlords and tenants in relation to how they deal with the fallout of such problems – and most notably who picks up the cost of repairs to property.

He outlines: “Most leases require landlords to take out insurance to cover the building fabric against flood damage and recharge the premium to the tenant.

“However, this doesn’t usually cover the tenant’s trade fixtures and stock, which the tenant is responsible for insuring. There is always the danger that tenants, particularly those with little business experience, assume that such items are covered in the insurance that they are paying their landlord.

“This is a hugely important issue for tenants as they could potentially run the risk of losing their business if their trade fixtures and stock are not insured. It is vital that they always check what is covered by the insurance that the landlord is responsible for so that they know what they must take their own insurance out to cover against.

“Similarly, landlords must recognise the importance of taking out sufficient insurance cover for the building in accordance with the terms of the lease. If the cover is inadequate, the landlord could suffer significant losses.

On the issue of flood damage, Revitt added: “Most leases provide for the rent to be suspended while a building is repaired due to such problems.

“However, the insurance will normally compensate the landlord for loss of rent. If the appropriate insurance is not obtained, then a landlord could suffer the double blow of receiving no rent and having to pay their own repair costs.

“Reviewing the insurance obligations under a lease and checking the cover in place should help both landlords and tenants prepare for the worst in the best possible manner.

“Finally, it is worth bearing in mind that The Association of British Insurers currently has an agreement that ensures universal provision of flood insurance which ends in 2013, with the effect that in 2013 many UK properties may become uninsurable, or only insurable at vast cost.”