Tenants of commercial premises or flats held on a long lease usually end up reimbursing the landlord’s costs of obtaining buildings insurance.

In many cases the lease says that the recovery is limited to costs ‘reasonably incurred’, or words to that effect.  The message for landlords is that they should be prepared to justify their insurance arrangements by showing that they have not over-insured and that they have ‘shopped around’.  Tenants can challenge the landlord’s costs if they think they are paying too much.  This is not to say that the landlord is compelled always to buy the cheapest insurance, but the decision overall must be ‘reasonable’.