Rented Premises Damage Extension

Purpose

AHB clause 7.6 excludes liability claims for damage to third-party property where the policyholder has rented, leased, hired or borrowed the property, or holds it under a bailment arrangement. The rented premises damage extension lifts this exclusion for defined categories, giving a tenant or lessee cover for damage they themselves cause to the rented or leased item.

Effect and limits

The extension is usually capped by a separate, considerably lower sum insured with its own deductible, and commonly continues to exclude ordinary wear and tear as well as certain categories of property such as motor, aircraft and watercraft. In personal liability cover the clause typically responds to damage to a rented flat or everyday rented items; in commercial liability cover it mainly concerns rented business premises, machinery and equipment.

Negotiation and practice

The agreed sum insured should reflect the value of the property typically rented, for example the current value of hired construction machinery or the rental value of commercial premises. Tenants of larger or higher-value assets frequently negotiate higher sub-limits and check whether the clause also responds to damage caused by subcontractors engaged to work on the rented property.