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The risk of uninsured risks

Almost all leases include an obligation on the landlord to insure the building.  The main reason for this is that the landlord has a capital interest in the building and wants to control its state of repair by way of insurance and service charge rent.  Additionally, where the building has several tenants, it is far simpler for the landlord to arrange the insurance than to leave it to the various tenants.  The lease will list the ‘insured risks’ which the landlord has an obligation to insure against.  These will include the standard risks such as fire, explosion, storm, impact by vehicles or planes, etc.  In a fully repairing and insuring (FRI) lease, the tenant has an obligation to keep the property in good (and substantial) repair and condition, but this will usually exclude any damage caused by an insured risk.  This means that if the property is damaged by an insured risk, the tenant does not need to repair the damage (which is only fair seeing as the tenant is paying the insurance premium and otherwise would effectively be paying twice), the landlord must reinstate and the rent under the lease is suspended until the property has been reinstated.

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