The building insurance is generally meant for large commercial building owners and homeowners. The owners can use the commercial building/residence to run their own business/live or to rent it. It may be possible that the owner of such building may occupy the part of the business and lease the remaining to someone else. The owners of the commercial building are recommended to purchase a building insurance to cover the perils of the damages that can be caused to the building by the fire, wind, theft, violence, earthquakes, lightning, etc.

The owner of the building is not required to buy a cover for the contents of individual offices/shops. The occupiers of the building can buy it separately to cover their own individual risk. The building insurance is meant for the superstructure an associated infrastructure only.

Case on Building Insurance

Mr. Gautam, an owner of a commercial building has rented out the building with two offices and kept some space for himself. Owing to the risk of fire and earthquakes, Mr. Gautam is contemplating to buy an insurance cover for the building with the tenants.

He approached the tenants that they should buy the insurance cover for the whole building collectively and contribute to the expenses of the premium based on the portions occupied by each one of them. The tenants already had an individual insurance for their offices and rejected the offer made by Mr. Gautam. They argued that Mr. Gautam is responsible for the insurance of the whole building since he is the owner of the building not them. They are just responsible to cover the risk of the contents of their own office spaces.

When Mr. Gautam discussed the same with his insurance advisor, he also reiterated the same, that as the destruction of building will be a cost falling on his shoulder, he should be the one getting the insurance for the building. The tenants are responsible only for the cost of their own office material and furniture.

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