Insurance Journal Forums

A client of mine raised an interesting question, and I'm still unsure after reading the ISO BI form again. He has a commercial bldg that leases to a single tenant. The leases states the tenant is reponsible for the property tax (Single net lease). Suppose a fire destroy the building, will the BI/EE form cover the portion of property tax? Will the "income" definition include property tax? The lease spells out the amount of the rent and the amount of tax separately.

The policy will pay whatever is defined in the lease as "rent". Your client should get a cert. of ins. from tenant confirming they ha business income coverage which would cover the tax as a continuing business expense (and confirming they have gl/umbrella cov. and landlord is listed as additional insured).

You need to read the policy itself. It has been my experience that "property taxes" are not usually covered under BI/EE. Although on the other hand, tenants agreements are considered usually to be an "insured contract." Business income expenditures are clearly defined. Extra expenses are clearly defined. Also, if the insured has a "special form" policy, all occurrences are covered UNLESS they are specifically excluded or limited by the policy provisions... Your best bet it to find out the name of the underwriter for the policy and call them and ask them what is covered and what is not.

I know this might not be helpful, but it really depends on the type of coverage (ie. basic, broad, special) and whether or not this is truly an ISO Policy or a policy that is manuscripted by the carrier.

If the tenant has opted for loss of income, in lieu of, extra expense the BI/EE form will define loss of income. It may be defined as gross income less non continuing business expenses. In the event of a covered loss it is highly likely the tenant's carrier will want a copy of the lease to confirm that two of the tenant's continuing business expenses are the landlord's property tax and rent payment. Also, if the lease has a rent abatement clause it is possible a covered loss will include the rent payment as non continuing business expense.

Hi,
Business income coverage, which would cover the tax as a continuing business expense (and confirming they have gl/umbrella cov. and landlord is listed as additional insured).

Rental business is one of the most safe investment you would ever make.In this business you have to make heavy investment for the first time but then you don't have to worry about future revenues as they are smooth and steady cash inflows.

In my opinion, it would be best to raise your question ISO BI for they are the on who knows their policy. In any way, it is not a bad idea to get an business income insurance for your business or much known as income protection insurance. This policies are the best for those who would want to secure their future, in cases of unfortunate events.