Commercial property insurance-a costly common pitfall
Commercial property insurance – loss of rent is quite an ambiguous term
A common one would be loss of rent. So loss of rent is quite an ambiguous term, but if you go into the definition section of your policy, you’ll be able to tell exactly what this actually means and what you’re covered for.
Because a lot of commercial property owners think that loss of rent means rent guarantee, and very difficult to tell the difference unless you know the kink of an insurance company. But to be clear, rent guarantee is what it says on the tin.
If someone does not pay the rent, that means the insurance company will step in and pay it for you, and that could be for whatever reason.
Loss of rent is simply if there’s an insured peril, say a fire. You can’t collect the rent because the property’s burned down, for example. That means an insurance company will step in and pay the loss of rent.
The important thing with a commercial property or a policy is there is no such thing as rent guarantee, you can’t get it.
A lot of commercial property owners think that loss of rent is rent guarantee when in actual fact, it’s not.
It’s only if an insured peril occurs, then that rent would be would be covered. That’s an important thing to read the policy wording.
Make sure you understand what is actually covered because loss of rent is covered but it is not rent guarantee. That’s one more common pitfall that we find quite a lot. When policy holders come to make claims, they expect that the rent is covered. It is not.
