Landlord wins insurance claim for damage caused by tenant

A commercial property company has won a claim that its insurers should pay for damage caused maliciously by tenants.

The case involved business tenants who had failed to pay rent and carry out certain work required under the terms of the lease. The property company tried to terminate the lease but the court allowed the tenants to remain, provided that rent arrears were paid and certain specified works were carried out.

The tenants did neither. Instead, they stripped out most of the contents of the property, causing considerable damage. They also left rotting food behind them.

The insurance on the property covered damage caused by malicious persons and theft which involved forcible entry to the property. The company made a claim on the basis that the tenants had caused the damage deliberately and stolen some of the fixtures and fittings.

The insurers argued that the damage was not malicious as it had simply occurred in the process of the tenants removing their property.

The court held that there was no evidence of forcible entry so therefore the claim relating to the theft had to fail. However, it held that damage to parts of the building including a kitchenette and smashed toilets probably was done maliciously together with damage to pipes and radiators. Because of the probable malicious intent, those items were covered by the insurance policy and so the company was entitled to compensation.

The company was also entitled to be compensated for the loss of three months’ rent to cover the period the property was empty while the damage was repaired.

Please contact Clare Jones about the issues raised in this article or any matter relating to litigation and mediation.