18 May CREPN #92 – Loss of Rent; Protect Your Income and Profit
<![CDATA[Hey property investor, have you thought about what happens when disaster strikes your property, how do you keep from a loss of rent? [x_video_embed type=”16:9″][/x_video_embed]If your tenants are unable to occupy your building, your rent will stop unless you protect your rent. Where will you get the money you need to pay your mortgage, pay your employees, and ongoing expenses? What about your profit? You would be shocked to know how many landlords do not buy Loss of Rent protection, especially on C & D class assets. If income matters, you want to insure your rents from loss in the event of a “covered loss” to your building.
Insurance is complicated, so know this:1 – The Property Coverage Form, has multiple lines of coverage. If there is not a number on your declaration page next to the coverage description, with rare exception, you do not have coverage! 2 – A property insurance policy with “special form” protects your Building from all perils EXCEPT those that are excluded, such as; “Earth Movement” & “Flood”.
What do you need to protect yourself from Loss of Rent?A – The coverage to insure your rents can be called many things:
- Business Income
- Business Interruption
- Loss of Rents
- Rental Value
- Net Operating Income before income taxes
- Ongoing Ordinary Expenses including Payroll
- Coinsurance: a percentage requirement that your needed limit be within the coinsurance proportion to the total limit possible.
- Monthly limitation: expressed as a fraction, ⅓, ¼, or 1/6 to the limit on the policy declaration