Author: Chris Boggs

Agents learn early that there are two types of property, real property and personal property. Real property is generally defined as land and everything attached to the land such as by roots, by being embedded in the land, permanently resting on the land such as a building or property permanently attached to the building. Personal property is essentially everything that isn't real property. (Basically, if you take the world and shake it, everything that doesn't fall off is real property.)

But there is a middle ground – fixtures. Fixtures begin life as personal property but become part of real property by attachment; however, they maintain their individual identity. Obviously, then, fixtures should be insured as real property. Or should they? Is it really that easy?

Improperly addressing fixtures leads to underinsurance, coinsurance, a court date and sometimes an errors and omissions (E&O) claim. Unfortunately, agents often ignore the very real challenge created by fixtures.

Seven keys to properly insuring fixtures discussed in this white paper are:

1. Being able to define “fixture;"
   
2. Knowing the three different types of fixtures;
   
3. Understanding how leases and laws affect the insurance coverage for fixtures;
   
4. Being well-versed on where and how fixtures can be insured in the commercial property policy;
   
5. Differentiating between “insurable interest" and “use interest" as it relates to fixtures;
   
6. Understanding how “utility" affects the preferred method of insuring fixtures; and
   
7. Knowing how to effectively utilize the six fixture endorsements. 
   

Defining Fixture

First, what is a “fixture"? Various sources were researched in an effort to adequately define “fixture."

• Webster's:
• “Something that is fixed or attached (as to a building) as a permanent appendage or as a structural part."
• “An item of movable property so incorporated into real property that it may be regarded as legally a part of it."
   
• Dictionary.com:
• “A piece of equipment or furniture that is fixed in position in a building or vehicle."
   
• Vocabulary.com:
• “An object firmly fixed in place."
• “The quality of being fixed in place as by some firm attachment."
   
• Uniform Commercial Code Article 9 (9-102):
• “Goods that have become so related to particular real property that an interest in them arises under real property law."
   
• Black's Law:
• “Personal property that is attached to land or a building and that is regarded as an irremovable part of the real property."
  

Black's goes on to say, “Historically, personal property becomes a fixture when it is physically fastened to or connected with the land or building and the fastening or connecting was done to enhance the utility of the land or building. If personal property has been attached to the land or building and enhances only the chattel's (personal property's) utility, it is not a fixture."

The Latin phrase used to define a fixture is “quicquid plantatur solo, solo cedit." This simply means, whatever is affixed to the soil (ground) belongs to the soil (ground).

So then, what is a fixture? For the remainder of this discussion the applicable definition of “fixture" is:

Personal property that is wholly distinguishable from the real property to which it is attached but which is intended to be a permanent improvement to and a utility for the real property to which it is attached.

Both a brick and a light fixture begin life as personal property, and ultimately both are attached to real property. The difference is, the brick, in a sense, loses is individual identity when it becomes part of a wall (and ultimately the structure), whereas the light fixture retains its individual identity and can be removed without damage to the structure or requiring any special efforts making it a fixture.

Another example is a water heater. A water heater is wholly distinguishable from the building to which it is attached, but once attached it becomes part of and increases the utility of the real property. Although the water heater can be removed (and replaced) without damaging the integrity of the structure, it is intended to be somewhat permanent and a utilitarian improvement to the property. Because it keeps its individual identity, it is a fixture.

Before moving beyond the defining of fixture, one question remains unanswered; how permanently attached is “permanent"? Unfortunately, no one simple answer seems to exist.

Some have suggested that “permanently" installed (necessary to create a fixture) means the property cannot be removed without substantial damage to itself or the property to which it is attached. Without lights, HVAC, water heaters and other fixtures, the building is essentially uninhabitable. These types of fixtures can be removed without damaging them or the structure, thus, the meaning and application of “permanently" installed cannot be and is not limited to this definition.

A more logical treatment of “permanently" installed must be applied - intent. Intent is also a key to discerning permanency and ultimately what constitutes a fixture. What was the intent when the “fixture" was installed. Was the property intended to become part of the building and/or is it necessary for the full enjoyment of the building or the operation within the building? If so, it may be considered permanently installed, affixed or fixed.

Qualifying as “permanently" installed is a function and balance of permanence and intent. Without the lights, the building cannot be used to its full potential; the lights are intended to be somewhat permanent, but they can be removed without damage to the building or the lights themselves. The balance of permanence and intent qualifies the lights as fixtures as an example in this discussion.

Three Types of Fixtures

What constitutes a “fixture" is a matter of real property law in many states. As stated, a fixture is personal property that becomes real property by attachment even though it generally retains its own identity. But this insurance discussion applies to three types of fixtures, these include:

• Trade fixtures: Personal property owned or supplied by a tenant that is attached to the real property and which is necessary for the operations of business. Examples can include display cases, walk-in refrigeration units, wall-mounted cooking equipment, book shelves, dental chairs and other such property common and necessary for a specific operation.
  
• Ornamental fixtures: Personal property a tenant may attach to the unit to make it more habitable and inviting. While such fixtures are not necessarily required for the functioning or operation of the building or the business, such fixtures improve the atmosphere and utility for the occupiers and visitors. Ornamental fixtures are known as and referred to in an insurance policy as “improvements and betterments." Improvements and betterments can include the “build outs" undertaken by and at the tenant's expense but which cannot be removed by the tenant upon leaving.
  
• Building fixtures: Personal property made part of the building and necessary for its full operation. This includes plumbing fixtures, water heaters, elevator cars, HVAC systems, electrical wiring, lights, etc. Obviously, the intent is to make such property a part of the real property because without such fixtures the building is functionally useless or nearly uninhabitable.
  

Leases and Legal Questions Surrounding Fixtures

Fixtures, as the middle ground between real and business personal property, are often subject to legal questions and contractual provisions (leases). What are a tenant's rights to and in specific fixtures? What does the lease require of the tenant? Who owns the fixtures?

As before, the answers to these questions are based on the type of fixture under consideration:

• Trade Fixtures: Leases generally grant the tenant the opportunity to remove trade fixtures, provided certain conditions are met (i.e. any damage to the building arising out of their removal is repaired). Further, real property law in nearly every state allows the removal of trade fixtures provided such removal is done prior to the departure of the tenant, unless they are evicted. Because these fixtures are allowed to be removed, the building owner generally assumes no ownership rights in or responsibility for trade fixtures. These are wholly the responsibility of the tenant.
  
• Ornamental Fixtures (TIBs): These become part of the building and are thus the property of the building owner upon completion. Few leases allow otherwise. Real property law supports this position as well. The building owner gains insurable interest by ownership in these fixtures, but they may transfer insurance responsibilities to the tenant. Note, making the tenant responsible for insuring these fixtures does not affect the ownership of the property, only who is required to provide the coverage.
  
• Building Fixtures: Without building fixtures, the building cannot be used as intended or is functionally uninhabitable. These fixtures are almost always owned by the building owner. But like ornamental fixtures, the building owner may require the tenant to insure some building fixtures. Further, some leases place responsibility for upkeep and maintenance of certain building fixtures on the tenant. Be careful not to confuse the requirement to insure with the requirement to maintain – these are not equivalent requirements (the tenant could be held responsible for upkeep but not insuring or vice versa).
  

A lease can make the tenant responsible for insuring most fixtures within and part of the building – regardless of ownership. Some leases even place responsibility on the tenant for maintenance of fixtures. Obviously, the lease plays a major part in deciding who must insure the fixtures and how the fixtures are to be insured (as building or business personal property).

Coverage for “Fixtures" in the CPP

Insurance Services Office's (ISO's) commercial property policy (CPP) offers about 14 ways to insure fixtures (ok, so that's hyperbole). Sometimes they are insured as real property and sometimes as business personal property. As if insurance isn't confusing enough, agents must guess whether a fixture should be covered as building or business personal property. 

The CPP extends coverage to “fixtures" under building coverage as follows:

1. Covered Property

a. Building, meaning the building or structure described in the Declarations, including:

 (2) Fixtures, including outdoor fixtures;

Fixtures are protected as business personal property as per this language:

1. Covered Property

b. Your Business Personal Property consists of the following property located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater:

(1) Furniture and fixtures;

(6) Your use interest as tenant in improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions:

(a) Made a part of the building or structure you occupy but do not own; and

(b) You acquired or made at your expense but cannot legally remove;

Although fixtures are legally considered real property, they are insurable as building or business personal property based upon specific details. Let's put this in perspective based on the three types or fixtures already introduced:

• Trade Fixtures: These fixtures are generally owned and installed by the tenant and are necessary for the operation of the tenant's business. The tenant can insure these fixtures as building or business personal property. If the tenant desires to cover these fixtures as building, such must be noted on the application, “Building includes trade fixtures." If the insured is satisfied with covering these fixtures as business personal property, the agent must confirm that the values are adequately accounted for within the BPP limit to avoid a coinsurance penalty.
  
• Ornamental Fixtures: More commonly referred to in insurance as tenant's improvements and betterments (TIBs), ornamental fixtures can also be insured as either real or business personal property. Unless the lease makes the tenant responsible for the ornamental fixtures, they are insured on the tenant's policy as BPP and the landlord's policy as building. Why in both places, because when TIBs are covered as BPP, the tenant's use interest (described in the next section) in the TIBs is covered, NOT the property itself. But, if the lease makes the tenant responsible for insuring the TIBs, then these fixtures should be insured as building - if the proper endorsements are attached to both the lessor's and lessee's policies. (On a side note, if the lease is cancelled due to a covered cause of loss, the tenant can garner coverage for this loss of use (not the same as “use interest") of the TIBs by attachment of the Leasehold Interest Coverage Form (CP 00 60).)
  
• Building Fixtures: These are generally owned solely by the building owner. Such fixtures are necessary for the full enjoyment and utility of the building. Building fixtures are always covered as building. Occasionally, a lease may place the responsibility for insuring such fixtures on the tenant; regardless, this is still building (real) property. If the tenant is required to insure building fixtures there is an option to cover these fixtures without including building coverage on the tenant's policy if and only if the proper endorsement is attached (new in 2017).
  

Use Interest – You're Going to Love This

Even though the tenant loses ownership of the tenant's improvements and betterments that it paid for, it benefits from their presence, thus, the tenant has “use interest" during the entire period of occupancy. This concept of use interest is, in a sense, more beneficial and broader than coverage limited to and requiring insurable interest. Insurable interest is created by ownership, bailment or contract. Use interest is created when the person or entity enjoys the benefits of use of the property - even without ownership, bailment or contract.

For example, assume the tenant pays to add additional interior walls within the leased building to create offices. Upon completion, these interior walls become part of the real property and ownership legally transfers to the building owner. However, the tenant enjoys the use and benefits of the walls they paid for but don't own. If these walls are damaged three years after installation, the tenant has lost its use interest in the walls and is due payment from the insurance carrier if no other party (the building owner) pays to replace them. Although the tenant doesn't have insurable interest, it has use interest; and because the tenant lost the use of the walls, they are due payment as prescribed in the valuation section of the policy.

The commercial property policy applies the concept of use interest protection to only tenant's improvements and betterments. For any other type of property insurable interest must exist to garner coverage.

When a lease requires the tenant to insure the TIBs, the insured tenant loses its use interest protection and gains insurable interest by contract. At this point, the TIBs must be covered as building – unless endorsed otherwise (discussed in a later section).

It's a Question of “Utility" – But There is a Preferred Method

Pragmatically, the building owner should insure all fixtures other than trade fixtures!

Ownership in ornamental features transfers by lease and law to the building owner, and building fixtures are necessary for the intended operation of the entire building and are owned by the landlord. Because the building owner gains or retains the ownership and utility of these fixtures, the landlord should provide protection and not depend on the tenant.

Trade fixtures are solely for the benefit and utility of the tenant. Further, these are generally the only fixtures that can legally and by lease be removed from the premises upon the tenant's departure. Thus, trade fixtures are the only fixtures that should be insured by the tenant.

When a lease places insurance responsibility for ornamental fixtures and building fixtures on the tenant, a potential for a major gap in protection is created.

Assume the lease used by the owner of a seven-tenant building makes the tenants responsible for insuring all the ornamental fixtures (TIBs) and the building fixtures specific to each unit (HVAC, water heaters, etc.). The landlord has effectively forfeited insurable interest in these fixtures by lease. But doing this does not remove the value of these fixtures from the building value.

Three of the seven units are vacant at the time of the loss. Because the building owner has delegated insurable interest in these fixtures, its insurance policy does not pay to replace these fixtures. The landlord is required to pay these expenses out of pocket.

Agents insuring building owners may want to explain to their landlord clients the potential gaps created when the lease transfers insurance responsibility to the tenant. Also, if the landlord desires to continue such practices, certain endorsements must be attached to the policy to avoid coinsurance issues.

Agents insuring the tenant must also review the lease to confirm the policy covers all the fixtures for which the tenant is contractually responsible. Confirm the policy extends protection to all fixtures in which the tenant has insurable interest and confirm the proper endorsements are attached.

“Fixture" Endorsements

Six ISO endorsements address fixtures. Five are available for use with the tenant's policy and one is intended for the building owner.

Tenant Options

Two of the five tenant options apply to building fixtures and the three remaining options affect coverage for tenant's improvements and betterments (TIBs). Three of these endorsements were introduced in 2017 and the other two have existed since 1985. The available tenant options are:

Notice that only one of the options addresses trade fixtures. When trade fixtures are in question, the insured can cover them as either building or business personal property; the chosen method must be noted on the application. But be warned, if the decision is made to insure trade fixtures as building, the insured loses the option to use the two endorsements specific to building fixtures (CP 14 01 and CP 14 02). This limitation is addressed below. Following is a brief discussion of each option presented above.

Ordinance or Law for Tenant's Improvements and Betterments. Assume, for sake of this discussion, the building suffers major damaged as a result of a covered cause of loss prompting the local jurisdiction to require the building to comply with all current building codes. The traditional ordinance or law endorsements, the CP 04 05, covers only the building owner's interest in the building, not the tenant's use interest in its improvements and betterments.

Since the tenant is required by its lease to insure the improvements and betterments, the building owner's policy does not pay to put them back, and certainly not in compliance with current building codes. Because of this, the tenant will experience a gap in coverage and a potentially major out-of-pocket expense because the CP 04 05 isn't available for ornamental fixtures only building fixtures.

To close this coverage gap, ISO introduced a new endorsement, the CP 04 26 09 17 Ordinance or Law Coverage for Tenant's Interest in Improvements and Betterments (Tenant's Policy). This endorsement provides the same three coverage parts found in the CP 04 05:

• Coverage A – Coverage for loss to the undamaged portion of the tenant's improvements and betterments;
  
• Coverage B – Demolition cost coverage; and
  
• Coverage C – Increased cost of construction coverage.
  

According to ISO, the coverage extended from and the conditions found within this endorsement are equivalent to those found in the CP 04 05. The major difference between the CP 04 05 and the CP 04 26 is the terminology related specifically to improvements and betterments found in the new CP 04 26. 

ISO's Commercial Property Rule 32.F.2. in regard to this endorsement states: When Endorsement CP 04 26 is added to the policy, do not write improvements and betterments as part of an item also covering personal property under a blanket amount. Because of this rule, the insured must either list TIB's as a separate limit or use the CP 19 10 to remove them from the BPP limits. The CP 19 10 is addressed separately.

ISO's introduction of the CP 04 26 was a welcome addition to coverage for the tenant exposures related to improvements and betterments. However, there is a provision in the wording that is somewhat concerning:

C. Coverage

1. Coverage A - Coverage For Loss To The Undamaged Portion Of Tenant's Improvements And Betterments

We will pay under Coverage A for the loss in value of the undamaged portion of the improvements and betterments when:

a. The improvements and betterments are damaged and the ordinance or law requires demolition of the undamaged parts of such property; or

b. The undamaged improvements and betterments, or undamaged parts of the improvements and betterments, are demolished or damaged in the course of demolition or repair of the building or part of the building where such property is located, as a consequence of the ordinance or law. But we will not pay under Coverage A for undamaged improvements and betterments that could be removed from the building, without incurring damage to such improvements and betterments, prior to demolition or repair of the building.

Note the bolded wording, which also applies to Coverage Part B. Three key issues/questions arise from this provision:

• Who decides if an improvement and betterment can be removed without being damaged?
  
• When is the decision made?
  
• There is no way for the insured to get coverage for the removal of the undamaged I&Bs, so the removal becomes an out-of-pocket expense for the insured to comply with the endorsement.
  

Another issue to consider, will requiring the removal of undamaged improvements and betterments increase the period of restoration? It seems unreasonable for one policy to increase the loss amount in another policy.

Coverage for Building Fixtures in the Tenant's Policy. As discussed, commercial tenants may be contractually required by lease to insure or even be responsible for the care and maintenance of building fixtures such as HVAC systems, water heaters and other such property. Prior to ISO's 2017 introduction of the CP 14 01 and CP 14 02, the tenant's only option to garner coverage for the landlord-owned building fixtures was to rely on the insurable interest created by the lease and extend coverage to the landlord's property by providing building coverage on their commercial property policy.

Both commercial property endorsements more specifically address the tenant's building fixture exposure:

• CP 14 01 09 17 Scheduled Building Property Tenant's Policy: The tenant's policy is modified by this endorsement to include certain landlord-owned building property as insured property; but only if the insured specifically schedules the property and provides a limit.
  
• CP 14 02 09 17 Unscheduled Building Property Tenant's Policy: Like the CP 14 01, this endorsement modifies the tenant's policy to include certain landlord-owned building property as insured property; but unlike the CP 14 01, this endorsement does not require the insured to specifically schedule the property. All property, other than building glass is included within the limit selected. 
  

Both endorsements define building property to mean building fixtures and permanently installed machinery and equipment. The only difference is that the CP 14 01 includes building glass within the definition of building property and the CP 14 02 does not. 

Further, both endorsements list the applicable cause of loss form, coinsurance percentage (if applicable), deductible, valuation method (ACV or RC) and the limits of coverage applicable to the scheduled or unscheduled property. A separate building glass deductible is also an option in both endorsements. The coverage forms, percentages and amounts in the endorsement can match the underlying policy or apply endorsement-specific limits, forms, and amounts. For example, the underlying property policy may have a $1,000 deductible while the property listed in whichever endorsement is used can have a $500 deductible.

According to ISO commercial property Rule 30, these endorsements, "may be used to provide coverage for building glass, building fixtures and/or permanently installed machinery and equipment, provided that:

(1) The insured is a tenant and the Building is not otherwise covered under the policy; and

(2) The tenant has a contractual responsibility to insure such property, or a contractual responsibility to pay for loss or damage to that property."

If the policy already includes building (real property) coverage, this endorsement cannot be used. For example, if the insured chooses to insure its trade fixtures under building coverage, neither of these endorsements is available for use. If other property is covered as building and the insured is responsible for certain building fixtures, they must insure the building fixtures as building as was done before the introduction of these endorsements.

Before leaving this discussion, be sure to note that neither of these endorsements includes tenant's improvements and betterments. The only type of fixtures addressed be these endorsements is building fixtures. This creates a gap in coverage for the tenant and the building owner.

Remember, these endorsements can be used ONLY when there is no building coverage – as per ISO rules. If the lease requires the tenant to insure building fixtures, and either of these endorsements is used to extend the required coverage, there does not appear to be any way to garner ordinance or law protection for such fixtures leading to the gap in protection.

ISO's CP 04 26, previously discussed, covers only those ordinances or laws affecting TIBs. Further, the CP 04 05 Ordinance or Law Coverage extends protection to property insured as building, and the definition of building includes building fixtures by definition in the commercial property policy. Once a building fixture is made the responsibility of the tenant, if either the CP 14 01 or CP 14 02 is used, the fixture is now insured as business personal property. Since it's no longer building, the CP 04 05 does not apply to these fixtures. And because they aren't TIBs, the CP 04 26 doesn't respond.

Ultimately, if the building fixtures become subject to a building code official's decision following a loss, there does not appear to be coverage for the increased cost to upgrade these fixtures.

An Alternative for Covering Tenant's Improvements and Betterments as Building. Is a particular piece of insured property considered “building" or “business personal property"? The unique purpose of the CP 14 15 - Additional Building Property endorsement is to assign “building" status to the property specified in the endorsement.

As has been discussed throughout this white paper, fixtures are the middle ground between real and personal property. Tenant's improvements and betterments (ornamental fixtures) are truly real property, but the CPP definition of business personal property extends to include the tenant's “use interest" in their TIBs – so they are insured on the tenant's policy as business personal property. But what about the insurance implications when, as might be the case, the tenant is required by lease to insure and pay to replace the improvements and betterments following a loss?

When the tenant's lease requires it to insure the value of (not just its use interest in) the TIBs, one option is to extend coverage using the CP 14 15 - Additional Building Property endorsement. The endorsement states that the property listed in the schedule is considered part of the “building" coverage and is no longer considered “business personal property." When this is done, another problem is solved – the CP 04 05 Ordinance or Law endorsement can be used to cover the TIBs because they are now within the definition of building.

However, if this is the chosen option for insuring TIBs, there are two facts to remember.

1. Building coverage must be entered on the application with the appropriate limit for the TIBs.
   
2. The insured can no longer insure building fixtures as BPP using either the CP 14 01 or the CP 14 02 because the rules do not allow building coverage. If building fixtures are required to also be insured, they will have part of the building limit as well. 
   

If the agent and tenant prefer to not extend coverage to TIBs as building because of a desire to include coverage for building fixtures using either the CP 14 01 or CP 14 02, there is an option – the CP 19 10 discussed next.

An Option to Specifically Insure TIBs – Not as Building. Maybe the least requested property endorsement offered by ISO, the CP 19 10 Your Business Personal Property -Separation of Coverage allows the insured to manage specific business personal property (BPP) exposures by removing the property scheduled in the endorsement from the list of covered BPP in the underlying form. The insured is able to make three key choices regarding the property scheduled in this endorsement, they pick:

• The limit of coverage for the specified property;
  
• The cause of loss form applicable to the scheduled property; and
  
• The coinsurance percentage applicable to the scheduled property. 
  

Property specifically scheduled on this endorsement is removed from the limits applicable to BPP in the underlying form. Further, the value of the scheduled property is not included in the BPP coinsurance calculation. As noted, the property listed in this form is subject to a separate coinsurance calculation.

According to ISO rules, this endorsement can be used to separately schedule:

1. Stock;
   
2. Contents except stock;
   
3. Machinery and equipment;
   
4. Furniture;
   
5. Fixtures;
   
6. Fixtures, improvements and alterations making up part of the building and owned by the insured as unit-owners (as covered in Form CP 00 18); and
   
7. Tenants Improvements and Betterments.
   

This endorsement can be used to extend separate limits, and even a different cause of loss, to two types of fixtures presented is this white paper. Trade fixtures are eligible for specific listing in this endorsement as are tenant's improvements and betterments. 

When this endorsement is used to extend coverage to tenant's improvements and betterments (TIBs), the insured garners the benefit of the building rate rather than the BPP rate without losing the ability to insured building fixtures using either the CP 14 01 or CP 14 02.

THE 1 Building Owner's Fixture Endorsement

Unlike the tenant's options, the building owner's one fixture-related option is an exclusionary endorsement, the CP 14 20 Additional Property Not Covered endorsement.

Because tenant's improvements and betterments are made a part of the real property and the landlord becomes the owner of these TIBs, their value is included as part of the building. And even if the landlord transfers the requirement to insure the property to the tenant, this does not remove the value of the property from the value of the building.

If the landlord does not account for the value of TIBs, it could face a coinsurance penalty at the time of the loss. See the Big "I" VU article, Tenant Improvements and Betterments…Owner Beware for a more detailed explanation of this fact.

The CP 14 20 is used to remove from the list of covered property tenant's improvements and betterments. When the building owner makes the tenant(s) responsible for insuring the improvements and betterments, this endorsement must be attached to assure that the value of those TIBs is not used when the valuation is done and the coinsurance penalty is, or might be, applied.

One last note regarding the building owner's options regarding fixtures, there is NO option to remove the value of building fixtures from the building value. Even if the landlord requires the tenant to insure the building fixtures, the value of those fixtures is still used to develop the building value following a loss. There is no provision in ISO's commercial property policy's building coverage provision that precludes the carrier from including the value of all property defined as building in the development of the total insurable value. Yes, to garner payment requires insurable interest, but the development of the total value doesn't consider insurable interest – only what is considered part of the building.

The CP 14 20 allows the building owner to exclude TIBs from the definition of building, but there is nothing that allows the removal of building fixtures from the definition. As stated earlier, the landlord should insure ALL fixtures other than trade fixtures. But if they chose to push off ornamental fixtures (TIBs) and building fixtures to the tenant, the ramifications regarding the valuation procedure must be explained and addressed.

Let's Close – Finally

Who would have thought that a white paper on fixtures would exceed 5,500 words? Fixtures appear on the surface to be a rather simplistic insurance issue. In fact, fixtures are the subject of much debate not only in insurance but also in estate situations and at law.

Insuring fixtures is more complicated than assumed because:

• Fixtures are the middle ground between real and personal property;
  
• There are three types of fixtures that must be considered;
  
• Contracts and laws intrude; and
  
• Fixtures can be and are insured as both building and personal property in the commercial property policy. 
  

When guiding the insured, regardless if it's the tenant or the building owner, through their commercial property exposure, remember to analyze the fixture exposure. Explain to the client how the fixtures are classified in and covered by the property policy and take the necessary steps (including the use of endorsements) to properly extend protection to the fixtures for which they are responsible.

Last Updated: September 14, 2018

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