What it does
Tenants' improvements and betterments are fixtures, alterations, installations or additions made part of the building that the tenant does not own, acquired or made at its expense, and cannot legally remove. They are insured as Your Business Personal Property under CP 00 10. The ordinance or law exclusion still applies to them, and CP 04 05 is written for building owners. CP 04 26, introduced in the 09 17 edition, gives tenants three optional coverages for the improvements and betterments described in its Schedule:
- Coverage A: loss to the undamaged portion of the improvements and betterments when a law requires their demolition.
- Coverage B: demolition cost.
- Coverage C: increased cost of construction to comply with the law. If the tenant relocates, payment is capped at what the increased cost would have been at the original premises or the new premises, whichever applies.
Key provisions
- Separate or combined limits for Coverages B and C.
- Optional Post-Loss Ordinance or Law provision for laws that change after the loss but before repair.
- Proportional payment when covered and uncovered damage combine to trigger the law, for example wind plus flood.
- The pollutant and fungus limitations parallel those in CP 04 05.
Who needs it
Any tenant whose lease makes it responsible for rebuilding its space, or whose build-out would have to meet new code requirements after a loss: sprinklers, accessibility, kitchen ventilation, electrical upgrades.
Quoting and selling notes
- Ask for the cost of the original build-out and the lease terms on who restores improvements after a casualty.
- Pair it with Business Income and CP 15 31 for the extra time code upgrades add to reopening.
- For tenants that must insure building glass, fixtures or equipment under the lease, see CP 14 01 and CP 14 02.
