Responsibility for shop window glass insurance is not clear cut. Please read on for summary information, for shopkeepers and retailers, leasing business premises.
Types of shop leases in the United Kingdom
As with most countries, in the UK there are two main types of shops. The multi-location, usually national, retailers and the independents. The vast majority of these shops will be in buildings that are rented, or leased. The buildings can be owned by a variety of entities, from individuals to large pension funds.
The common theme throughout, for these premises, is that the retailer will have some form of lease agreement, with the landlord. There are very few commercial leases that are identical. Most leases are drafted by solicitors appointed by the landlord. The lease will outline the responsibilities of both parties, the lessee and the lessor. The lessee is the party that is renting the property. The lessor does not need to be the building owner, but they are the party who usually receive the rental payments.
Most leases will contain details of the insurance responsibilities for each party. The landlords usual main responsibility is to arrange a suitable commercial property owners insurance policy. The lease will specify what levels of cover need to be included. Property owners liability insurance is normally included along with buildings.
Insurable interest and commercial property leases
One of the main principles of insurance, is that of insurable interest. Normally you need a financial interest in the insured property (ie the building, contents, computers or stock) to be able to arrange a policy of insurance. However, there are circumstances where this does not strictly apply. One of these is where retailers are leasing, or renting, a business premises.
There are two circumstances to consider. The first, is where there is full insuring and repairing lease. This places the responsibility to arrange the commercial property owners insurance, on the tenant. This will be covered under a future post. The second one is that nearly all commercial property leases place the onus to insure glass on the tenant.
Even though the shop front glass does not belong to the tenant, in most cases, they need to insure it. As mentioned above, leases are individually drafted and there will be leases without this responsibility.
Shop window glass insurance policy cover
Most shop insurance package policies automatically include a section of cover for shop front windows and glass. It is important that you consider carefully the level of cover that is provided though. Some of the bigger commercial insurance companies cover is unlimited. Some policies though do have a set sum insured, which can be quite low. You need to consider what the total replacement cost is, for all fixed glass in the leased premises. You’ll also need to include an amount for emergency glazing call out and boarding up costs. If you take the step of arranging your cover through a business insurance broker, they can advise you on the right levels of cover to take out.
If you submit a claim under your business insurance policy, your insurers may ask for a copy of the lease. This is so they can check that you, the tenant, are responsible for the shop front glass. Your broker will help, and guide, you through this process.