Glossary

Tenants' improvements and betterments

Fixtures, alterations and additions a tenant pays for but cannot legally remove, insured by the tenant as its use interest under its own property policy.

Also called: TIB, improvements and betterments, tenant improvements, leasehold improvements

Improvements and betterments are fixtures, alterations, installations or additions that a tenant makes at its own expense to space it does not own, that become part of the building, and that it cannot legally remove at the end of the lease. A restaurant's build-out, new walls, flooring and built-in counters are typical. The landlord owns them, so the tenant insures its use interest for the rest of the lease. The ISO CP 00 10 form treats that interest as part of Your Business Personal Property.

Valuation is where tenants get surprised. If the tenant repairs or replaces promptly, the form pays actual cash value, or replacement cost if that option is on the policy. If the work is not done as soon as reasonably possible, it pays only a share of the original cost, reduced for lease time used. If the landlord or anyone else pays for the repair, the tenant's policy pays nothing. Say a tenant spends $60,000 on a build-out under a 10-year lease, a fire destroys it at the end of year four, and nothing is rebuilt: the proportional rule gives 6/10 x $60,000, or $36,000 (hypothetical).

Include the value in the property limit so the coinsurance test is met, and read the lease for who must insure and rebuild. The guide on tenant improvements and betterments: who insures them covers the lease and valuation questions, and replacement cost explains the valuation option.

Last reviewed October 10, 2026

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Related terms

Replacement cost A valuation basis that pays the cost to repair or replace damaged property with like kind and quality, without deducting for depreciation. Actual cash value A property valuation basis that pays the cost to replace damaged property minus depreciation for age and wear, not the price of a brand-new item. Insurable interest A real financial stake in the thing insured, such that you would lose money if it were damaged or a person died; without one a policy generally cannot pay. Coinsurance A property policy condition requiring you to insure to a set percentage of value, or share the loss. (Health plans use the word for a cost share.) Statement of values A schedule listing each insured location with its building, contents and income values and construction details, used to rate and model a property program.

Related guides

Insurance requirements in commercial leases What a commercial lease typically makes a tenant buy, from liability limits and additional insured status to waivers, and how to negotiate them before signing. Replacement cost vs actual cash value for business property How commercial property policies value a loss: actual cash value vs replacement cost, the holdback, the 180-day rule, roof endorsements and a worked example. Signs, glass and outdoor property: what commercial property covers Signs, storefront glass, fences, trees and parking lots sit at the edges of a commercial property policy. Where the ISO CP 00 10 limits fall and who pays. Tenant improvements and betterments: who insures them Who insures a leased build-out depends on who paid, who owns it and what the lease says. How the ISO form values improvements and betterments.

Related industries

Coffee shop insurance What coffee shops and cafes need: GL with hot-beverage claims, property and equipment breakdown, spoilage, comp, and roasting or wholesale add-ons.