Tenant under a commercial lease is entitled to the benefit of Landlord insurances

March 11, 2014

in Property

Property: Unit Titles Act 2010Although the “new” Property Law Act is now seven years old there continues to be ongoing interpretation of some key changes introduced by that legislation particularly in the area of commercial leases.

One new development the Act brought in was the protection provided to Tenants where the Tenant was paying contributions to Landlord insurances for the property pursuant to the lease, usually by way of outgoings.

Essentially the provisions provide if the Landlord is insuring the property the Tenant is entitled to protection under those insurances for loss that is due to actions of the Tenant or its employees subject to certain exceptions such as illegal activities or deliberate actions causing loss.

A recent decision of the New Zealand High Court has clarified that this protection also extends to not only physical damage to the property but also prevents the Tenant from being required to pay compensation for lost rental and outgoings if such cover is incorporated into the Landlord’s insurances.

The case once again highlights how essential it is for both Landlord and Tenant to carefully understand all provisions of any lease document.  Matters that are traditionally treated as standard or routine can have significant impact further down the track.  Having a clear understanding of each parties obligations in respect to insurance is critical to avoid significant or unexpected implications during the course of the lease.

We are experts in all aspects of commercial leasing and would be happy to provide advice or assistance in relation to insurance under commercial leases or any other commercial lease matter.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Paul Farry


09 379 0055 or 03 477 8870


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain. 

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