Does "explosion" Include "terrorism"?

Can a landlord charge tenants for insuring against terrorism risks when the lease only obliged the tenants to pay for insurance against the risk of explosion?

Yes, according to the Upper Tribunal (Lands Chamber) overturning a decision of the Leasehold Valuation Tribunal. The ordinary meaning of explosion included explosions caused by terrorism and the Landlord was required to insure against any explosion, regardless of the cause of such an explosion. Additionally, the Royal Institute of Chartered Surveyors (RICS) Code of Practice on Service Charge Management (residential properties) states that insuring against terrorism risks should be given serious consideration.

"Whilst I can see the logic of having buildings insured against terrorist acts, it is equally clear that this decision can only be justified on public policy grounds" says commercial landlord and tenant specialist and Head of the Commercial Department, Gillian Jones. "It does seem unfair on the tenants in this case that they should effectively have to pay for all terrorism risks when the lease only really required them to pay for insurance for explosions arising from terrorist activities. Arguably, the landlord in this case should have been liable for the additional premiums that the additional terrorism insurance provided over and above the risk of explosion according to the strict terms of the lease."

We regularly advise on landlord and tenant matters including provisions relating to insurance and service charges. For more information please contact Partner and Head of the Commercial Department, Gillian Jones.




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