Spreading the cost of the terrorist threat
Pick up a typical business lease and you will find that the expression “insured risks” dertermines far more than the cover that the insuring party has to obtain. Given a case of severe damage to the building, the very same expression will govern, inter alia, the scope of any exception to the tenant’s repairing obligations, the circumstances in which rent liability is suspended, the duty of the landlord to reinstate, and, in certain instances, the operation of a right to break.
However, as was noted by James Garton, of Berwin Leighton (see
In the wake of the events of 11 September 2001, concerns are now understandably focused upon possible terrorist attacks. It was announced in September 2002 that the cover obtainable by insurers from the government-backed Pool Reinsurance Co will be extended in various important respects.
As explained by Helen Emmerson in
For an update on recent changes to the Pool Re scheme, see
Spreading the cost of the terrorist threat
Pick up a typical business lease and you will find that the expression “insured risks” dertermines far more than the cover that the insuring party has to obtain. Given a case of severe damage to the building, the very same expression will govern, inter alia, the scope of any exception to the tenant’s repairing obligations, the circumstances in which rent liability is suspended, the duty of the landlord to reinstate, and, in certain instances, the operation of a right to break.
However, as was noted by James Garton, of Berwin Leighton (see Are there gaps in your cover? Estates Gazette 27 May 2000, p133), the lease seldom, if ever, spells out how the parties will stand should the peril in question not amount to an insured risk as defined in the lease.
In the wake of the events of 11 September 2001, concerns are now understandably focused upon possible terrorist attacks. It was announced in September 2002 that the cover obtainable by insurers from the government-backed Pool Reinsurance Co will be extended in various important respects.
As explained by Helen Emmerson in Security costs Estates Gazette 21 September 2002, p200, the inevitable cost increase will just as inevitably fall upon the party who picks up the bill under the terms of the lease. Turning to pre-lease negotiations, the article rightly draws attention to building leases, where little will be gained without considering the corresponding provisions agreed, or to be agreed, with the building contractor.
For an update on recent changes to the Pool Re scheme, see From cover to cover, by Adam Levitt and Hammad Akhtar, of Herbert Smith, Estates Gazette 12 April 2003, p134.