Tenant Improvements and Betterments
Tenant Improvements and Betterments (TI&B) are modifications, installations, or improvements you make to a leased space that become a permanent part of the building and legally belong to the landlord, but which you have an insurable interest in because you paid for them — things like walls, flooring, custom kitchen installations, and built-in equipment.
What You Need to Know
Your insurable interest in TI&B lasts for the shorter of the remaining lease term, or the period until you would have recovered your investment through depreciation. TI&B differs from your business personal property, which you own and could remove, and from the building itself, which your landlord owns and insures.
Common tenant improvements and betterments in restaurants:
- Commercial kitchen installation and equipment hookups
- Walls, flooring, ceilings, and lighting fixtures
- Plumbing and electrical upgrades beyond base building
- Bar construction, built-in shelving, and built-in seating
Why It Matters for Restaurant Owners
Most restaurants operate in leased spaces, and the cost of tenant improvements and betterments is often the single largest investment you make in your business — easily $200,000 to $1 million or more for a full restaurant buildout. If your restaurant is damaged by fire or other covered peril, your landlord's insurance only covers the building structure as originally constructed — they won't pay to rebuild your custom improvements.
Critical coverage steps:
- Calculate the full replacement cost of all your tenant improvements, room by room
- Ensure your commercial property policy has an adequate limit specifically for tenant improvements and betterments
- Purchase replacement cost coverage rather than actual cash value coverage
- Update your coverage whenever you make additional improvements
- Document your improvements with photos, receipts, and contractor invoices
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