In California Landlords have no right to recover from an insurance company for tenant improvements and betterments unless the landlord has an insurable interest in the property insured. In order to have an insurable interest the landlord must have a pecuniary interest in the property.
Most commercial lease agreements imposed no financial risk on the landlord for damages to the tenant improvements during the life of the lease. The risk is on the tenant to have insurance to cover damages caused by a cover loss to tenant improvements and betterments. Generally there is no coverage to the landlord under a typical commercial general liability policy that provides for tenant improvements and betterments.
The tenant has the insurable interests in improvements and betterments.
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