QLD Business Lease - Pay Full Year of Insurance Excess?

[Janet White]

Our leased business premise burnt to the ground on 27th January 2015. As part of the lease, we had to pay the owner of the building their excess insurance each year. This was because their insurance company deemed we (surfboard manufacturer), were more dangerous than their own business (dry cleaners) which operated from the same building. The insurance was for 12 months ending 5th July 2015.

We owed them some rent as at 28th January, however, the insurance excess of $2605 was paid for the full year.

Do we still have to pay for the full year of their insurance excess as we could only occupy the building until 27th January.

The fire ended up starting in the dry cleaning business.

 

[Sarah J]

Hi Janet,

It appears to me that if the building owner (or whomever was the owner of the dry cleaning business) caused the fire, it might be unreasonable to demand you pay the full amount of their excess. If they did indeed cause the fire and can no longer provide you with a premises to lease, they most likely have breached the lease agreement. As such, there are two possibilities, either the agreement is terminated and you no longer need to pay premiums under that agreement; or you pay premiums but have an action against the owner to compensate you for costs incurred due to their breach (therefore, they reimburse you for the premiums).

Therefore, an important question is who exactly caused the fire?

 

[Janet White]

The QFRS report stated that the fire started undeniably from some massage towels in the dry cleaners. They were stacked against the adjoining wall and dry cleaning staff admitted that they had been experimenting with different chemicals that day to remove the oil from the towels. The insurance excess was paid every year for the last 15 years. Do you think there may also be a claim on the previous 15 years of excess premiums charged to us for the increase charged to the landlord?