Denial of Recovery of Tenant Improvements Leads to Breach of Good Faith and Fair Dealing

Originally published by Denise Sze.

When it comes to commercial losses, taking the time to view the policy and figure out the applicable laws of the controlling state are necessary. However, sometimes, the basics are forgotten by even the insurance carrier. In an ideal world, losses are cut and dry but the reality is that almost every detail is up for interpretation of some sort. In a commercial loss, often more than one insurance policy kicks in when there is a landlord and tenant situation. The basic rule of thumb is that the landlord’s policy usually covers the real property loss while the tenant’s business personal property is covered under the tenant’s own business policy. However, often these lines are blurred and not definite. In order to determine coverage, both insurers will often request a copy of the lease to decipher whose policy covers what items destroyed.
The area of larges dispute seems to fall under tenant improvements and/or betterments. In California, the usage of…

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