A
common circumstance surrounding commercial leases involves the tenant making
alterations, or improvementsto the rented premises. A strip mall retail
location could be used for many different types of tenants. It is unreasonable
to assume that the premises is already set up to handle any type of tenant from
a clothing store to a restaurant. For example, a new tenant might have to build
partitions, add refrigeration or install a kitchen.
The
commercial property policy defines improvements and betterments as “fixtures,
alterations, installations or additions that are made a part of the building
that is occupied but not owned by the named insured, and that the named insured
acquires or makes at his expense but cannot legally remove.” Since business personal
property coverage insures the tenant’s “use interest” in improvements and
betterments located at the rented premises, the amount of these improvements
should be calculated into the limit you choose for your business personal
property.
