Retail landlords and tenants have been amongst the worst affected by the recent civil disorder. For some tenants it may be the end of their business but for most it is now a matter of minimising the disruption to their operations. Similarly for landlords they must reinstate their premises as quickly as possible. The specific terms of the lease and of the insurance policy will be crucial. There is no alternative but to carefully review those documents in each case but the following broad principles are likely to apply :-

  1. Riot and civil disorder will generally be an insured risk under the terms of a retail lease and will be included within the terms of most commercial insurance policies.
  2. Usually it is the landlord's responsibility to arrange insurance for the premises, but for the building only, not the contents or the occupying business use. It will be for the tenant to insure against loss of, or damage to, stock and interruption to its business.
  3. It is the tenant's responsibility to ensure that the landlord is given immediate notice of the occurrence of any damage or loss arising from an insured risk which might affect the insurance policy relating to the premises. There may be provisions in the lease specifying how this notice has to be given.
  4. Insurance claims may need to be made within a very short period of the damage occurring (perhaps 7 days). Insurance companies are very likely to reject claims for business interruption caused by the closure of premises on a precautionary basis unless the policy is clear.
  5. The cost of replacing plate glass usually isn't included in the insurance cover on the basis it is cheaper to replace the glass than to insure it. This cost will fall to the tenant.
  6. If the premises are destroyed or damaged to the extent that they are unfit for occupation or use then payment of rent will usually be suspended until the premises have been reinstated or until the end of a fixed time period from the date of damage or destruction, if sooner.
  7. If the landlord considers that it is impossible or impractical to reinstate the premises the landlord may be able to terminate the lease upon giving notice to the tenant.
  8. Similarly the tenant may be able to terminate the lease by giving notice to the landlord if, following damage or destruction of the premises by an insured risk, the premises have not been reinstated within a fixed time period after the date of the damage or destruction.
  9. The tenant's repairing covenants will not extend to disrepair caused by an insured risk unless the insurance policy has been vitiated or the insurance proceeds withheld due to an act or omission of the tenant.
  10. Businesses without adequate insurance might be able to make a claim under the Riots Damages Act 1886 direct to the police but must do so within 14 days of the damage occurring. The claim is based on the theory that the police are responsible for maintaining law and order and, if they fail to do so, they pay for the damage. Such a claim would be unlikely to extend to losses for business interruption.

The contents of this article are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.

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