ADJUSTERSINTERNATIONAL.COM 3 that is covered. For example, when improvements are damaged, the tenant has not sustained a loss to property that belongs to the tenant, but rather has lost use of the property. It is this right of use that creates the tenant’s insurable interest in the improvements. (See Daeris, Inc. v Hartford Fire Ins. Co., 105 N.H. 117, 193 A. 2d 886, where the court held that a tenant’s use interest in improvements and betterments gives the tenant insurable interest.) Insurance Coverage for Improvements and Betterments In many cases, a tenant may rent a shell within a building for its business and spend thousands of dollars or more upgrading the property so that the business can function. These fixtures, alterations, and additions are considered improvements and betterments. For example, a bicycle retail and repair shop might install a sales area partitioned off to display the bicycles, permanent shelves for parts and tools, and machinery for repairing bicycles. These improvements need to be insured. Standard commercial property insurance provides coverage for any combination of the following property: (The standard businessowners policy is set up in similar fashion.) • Building • Your Business Personal Property • Personal Property of Others Coverage for a tenant’s improvements and betterments is included within the “Your Business Personal Property”category, item (6), as shown below: b. Your Business Personal Property2 located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises, consisting of the following unless otherwise specified in the Declarations or on the Your Business Personal Property — Separation of Coverage form: (1) Furniture and fixtures; (2) Machinery and equipment; (3) “Stock;” (4) All other personal property owned by you and used in your business; (5) Labor, materials or services furnished or arranged by you on personal property of others; (6) Your use interest as tenant in improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions: (a) Made a part of the building or structure you occupy but do not own; and (b) You acquired or made at your expense but cannot legally remove; (7) Leased personal property for which you have a contractual responsibility to insure, unless otherwise provided for under Personal Property of Others. The declarations page of the standard Insurance Services Office (ISO) Commercial Property Coverage form includes a heading for “Coverages Provided.” Wording adjacent to this heading states that “Insurance at the Described Premises Applies Only for Coverages for which a Limit of Insurance is Shown.” It is under this heading where specific coverages are listed. The following is an example:
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