REALWorld Law

Commercial leases

Insurance

Who pays the cost of insuring the real estate which is the subject of a lease and what events causing damage will usually be covered by the policy?

Canada

Canada

The landlord will generally be responsible for taking out insurance in respect of any building or improvements on the property. Policies are usually taken out for the replacement value of the building/premises and cover usual risks such as fire, storm, malicious damage or earthquake. Landlords may also take out general liability policies to cover risks and liabilities associated with the occupation and use of the property by tenants and their employees, customers and invitees. The cost of the landlord’s insurance premiums is typically passed on to the tenants as part of the shared operating expenses.

The tenant will normally be responsible for obtaining the necessary insurance policies for its business and property including general liability insurance and property damage insurance with respect to the tenant’s property, and are often required to procure business interruption insurance and insurance covering injury to employees and workers.