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Property
A landlord’s covenant to insure is a lease promise that the landlord will insure the building, usually with the tenant repaying the premium as insurance rent or service charge. It matters for insurance because the lease, not the policy, decides what must be insured, for how much and against which risks, while the tenant pays for a policy it does not control.
Part of: Commercial property owners’ insurance
In short
Under a covenant to insure, the landlord takes out buildings insurance and recovers the cost from tenants. In residential leases the cost is a service charge under section 18 of the Landlord and Tenant Act 1985, recoverable only so far as reasonably incurred (section 19). Section 30A and the Schedule give tenants the right to a summary of the cover, to inspect the policy, to notify the insurer of damage and to challenge a nominated insurer. FCA rules since 31 December 2023 also protect leaseholders in multi-occupancy buildings. Commercial leases rely on the lease wording: insured risks, reinstatement, rent suspension and waiver of subrogation.
Last reviewed 7 October 2026 by the Apex commercial team.
Where a building is let in parts, or let whole on terms that keep the landlord in control, the lease usually puts the insuring obligation on the landlord. The landlord then holds one policy for the whole building and passes the cost on. That avoids gaps between each tenant’s cover and protects the landlord’s and lender’s interest.
Insuring clauses vary, but most deal with the same points:
The tenant is not normally the policyholder. It pays for the policy but usually has no say in the wording and is not entitled to make claims itself.
For dwellings, the Landlord and Tenant Act 1985 controls how insurance costs are recovered. Section 18 defines a service charge to include amounts payable “directly or indirectly” for insurance. Section 19 limits recovery to costs that are reasonably incurred. Under section 27A, either side can ask the appropriate tribunal to decide whether a charge is payable and how much.
Section 30A brings in the Schedule to the Act, which gives tenants specific rights over insurance:
| Schedule paragraph | What the tenant can do |
|---|---|
| Paragraph 2 | Ask in writing for a summary of the cover. The landlord has 21 days to give the insured amount, the insurer’s name and the risks covered, or a copy of the policy. |
| Paragraph 3 | Inspect the policy and evidence of premium payment for the current and previous period, or ask for copies, again within 21 days. |
| Paragraph 4 | Where a superior landlord insures, the request passes up the chain. |
| Paragraph 6 | Failing to comply without reasonable excuse is a summary offence, with a fine up to level 4 on the standard scale. |
| Paragraph 7 | Notify the insurer directly of damage that could found a claim. If the policy’s notice period would end sooner, it is extended to six months from the tenant’s notice. |
| Paragraph 8 | Where the lease makes the tenant insure with a landlord-nominated insurer, apply to the county court or tribunal if the cover is unsatisfactory or the premiums excessive. |
Section 60 of the Leasehold and Freehold Reform Act 2024 adds a duty on landlords to give leaseholders specified insurance information each time cover is bought or renewed. When we reviewed this page, legislation.gov.uk showed that section as not yet in force, so check its status before relying on it.
Separately, the FCA changed its rules for multi-occupancy buildings insurance from 31 December 2023 (policy statement PS23/14). Insurers and brokers must treat leaseholders as policy stakeholders, act in their best interests, show fair value and give information about the policy and its pricing, including commission. The Financial Ombudsman Service can now hear leaseholder complaints about policies sold or renewed after that date.
The 1985 Act protections apply to dwellings, so a business tenant relies on the lease. Commercial leases commonly handle insurance in the following ways.
A landlord’s policy has to match the lease, or the gap falls on the landlord. Typical points are shown below, subject to the policy terms.
| Lease requirement | Policy section | Common gap |
|---|---|---|
| Reinstate to full value | Buildings / property owners | An out-of-date sum insured, leading to a proportionate cut in the claim |
| Rent stops after damage | Loss of rent | An indemnity period shorter than the lease’s suspension period |
| Terrorism as an insured risk | Terrorism cover | Commonly excluded from standard wordings unless bought |
| Liability for common parts | Property owners’ liability | Limits not reviewed; liability transferred under the lease not covered |
| Waiver of subrogation for tenants | Endorsement | Not agreed by the insurer, or limited to named tenants |
| Empty units | Unoccupancy conditions | Inspections and restrictions on cover after a set period |
The tenant still needs its own cover for contents, its fit-out where the lease makes that its responsibility, business interruption and liability arising from its business. The landlord’s policy does not usually provide any of these.
If this affects your business, these are the points a broker will ask about:
Speak to a broker
Property owners’ cover, placed by a named broker
Send us your current schedule, or tell us about the property if you are arranging cover for the first time. Or leave your number and a named broker will call you back, usually the same working day.
Apex Insurance Brokers is an independent insurance broker based in Bristol, established in 2009 and authorised and regulated by the Financial Conduct Authority. We are not tied to one insurer: we work with over 30 markets, including Lloyd’s syndicates through wholesale brokers, and every client has a named broker who handles the placement, mid-term changes, certificates for clients and the renewal.
Insurance rent is the tenant’s payment towards the landlord’s buildings insurance premium, reserved in the lease as rent. Commercial leases commonly use it so non-payment carries the same remedies as rent. In residential leases the cost is more often collected through the service charge, which the Landlord and Tenant Act 1985 limits to amounts reasonably incurred.
Yes, for dwellings. Under the Schedule to the Landlord and Tenant Act 1985, a tenant who pays for insurance through a service charge can ask in writing for a summary of the cover or to inspect the policy and premium evidence. The landlord must respond within 21 days. Failing to comply without reasonable excuse is an offence.
Yes. Section 19 limits recovery to costs reasonably incurred, and section 27A lets a tenant ask the appropriate tribunal whether a service charge is payable and how much. Where the lease requires insurance with a landlord-nominated insurer, paragraph 8 of the Schedule allows a challenge if cover is unsatisfactory or premiums are excessive.
Usually not. The landlord’s policy covers the building and, often, the landlord’s lost rent and liability as owner. Your stock, equipment, fit-out where the lease makes it yours, loss of income and liability arising from your business need your own policies.
It is the insurer’s agreement not to pursue the tenant after paying the landlord for damage the tenant caused. Leases often require the landlord to try to obtain it. Without it, a tenant whose negligence caused a fire could face a recovery claim from the landlord’s insurer, even though the tenant paid towards the premium.
Apex arranges buildings, loss of rent and property owners’ liability cover for landlords across the UK. Send us the insuring clause and your current schedule and we’ll check one against the other. Or call 0117 325 0027.
Start your quote Call 0117 325 0027Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances. Cover is always subject to the insurer’s acceptance and the policy terms, and this page does not guarantee that cover will be available or on what terms.
