Can a tenant benefit from rent suspension provisions or from the landlord's insurance policy?
Initial thoughts were that buildings insurance was unlikely to respond to the Covid 19 pandemic and that rent suspension clauses deal only with physical damage to property. However, a closer review of leases and insurance policies could potentially lead to a different conclusion. If the tenant has paid the premium for the landlord's insurance policy which covers damage or loss of rent due to human infection or contagious disease, it should be entitled to rely on it. In the event of insurance failing to step in, the uninsured risk provisions in a lease may assist.
A careful review of the lease and the landlord's insurance policy would be required in order to find out the position. This would include consideration of what is defined as an Insured Risk under the lease, the detail of the insurance, rent suspension and uninsured risk provisions and any statutory compliance clause.
The Financial Conduct Authority has asked the courts to resolve insurance issues in relation to business interruption policies promptly though this will likely still take some time. Tenants should act promptly to request a copy of relevant insurance policies from the landlord and arrange a review of their legal position. Landlords should raise the issue of potential claims with their insurers as soon as possible.
In any event, insurers should be notified once premises are empty as this is often a requirement in order to ensure validity.
If you need a review of your legal position under your lease, please contact Carol Phillips.