Many businesses do not own the space they occupy, but they make permanent changes and additions to these spaces. At what point does something become part of the building and not part of the business' personal property? What happens to items that fall in between the gap? How is Tenant's Improvements & Betterments different from Business Personal Property?
Many businesses rent the spaces where they operate. However, many businesses have to have special décor to support their brand image, others have specific machinery and appliances required to operate, and others simply need to configure their space in a certain way. All of these necessities could require permanent modification done to the rented spaces. These permanent changes might create a gap in coverage, which is why there is a Tenant’s Improvements and Betterments endorsement.
Specifically, the Tenant’s Improvements and Betterments endorsement covers items that fall in the grey area between the tenant’s business personal property and the building owner’s structure. In most insurance policies, permanently installed/attached items are considered fixtures, and fixtures are considered part of the overall structure—thus becoming real property. However, the tenant's insurance policy does not cover any part of the structure, as the tenant does not have any legal claim to it.
With the addition of the Tenant’s Improvements and Betterments endorsement, these items can be covered by the tenant's policy. The endorsement modifies the policy language to include fixtures added by the tenant in the business personal property limit. In the absence of the endorsement, these items may not be covered by either party’s insurance should a claim happen.