Business Interruption Insurance vs Loss of Rents
There are various reasons that a business can sustain a loss of revenue that it needs to cover rent. However, there is often confusion about business interruption insurance and loss of rent insurance. When it comes to these two types of policies, the lease will largely determine which will be beneficial. At Bentley & More LLP, our California business interruption insurance attorneys want to discuss this topic in light of the COVID-19 pandemic. As this virus has swept across the US, most businesses have seen a partial or complete loss of revenue, which means they may not be able to pay their landlords.
It is all in the lease
It is vital that both landlords and business tenants understand every aspect of the lease. For times when there is a significant business interruption, the wording will determine what happens with both parties. Whether there is business interruption due to a natural disaster like a fire or earthquake, or due to a pandemic like COVID-19, both loss of rent insurance and business interruption insurance come into play.
If a lease allows the tenant to abate (temporarily ceases paying) the rent while there is a disruption in business, then the landlord will need to find a way to replace the rent that cannot be collected for the duration of the disruption. This is when a landlord will want to have loss of rent insurance.
However, if the lease does not allow an abatement of the rent while there is an interruption in business, then the tenant will want to have business interruption insurance to cover their rent for the duration of the disruption.
However, it may be the case that the lease may not allow for a total abatement of the rent for the duration of a business interruption. In that case, both types of insurance could be adapted to ensure both the tenant and the landlord can handle their obligations.
A business that pays rent should still consider having business interruption insurance, even if their lease says they have an abatement in case of a business disruption. That is because businesses have many other expenses aside from rent that business interruption insurance will help cover in the event their revenue is halted.
Our business interruption insurance lawyers are ready to help
If your business has been interrupted by a disaster or unforeseen event, you may struggle to pay rent. At Bentley & More LLP, our Orange County personal injury lawyers want to help you navigate any insurance policies you may have that can help sustain you through this. As COVID-19 has spread across the US, businesses everywhere are figuring out how to pay rent with no incoming revenue. We will thoroughly review both your lease and your insurance policy to ensure that you are treated fairly by all parties involved. Let us help you get through this. When you need a California business interruption insurance lawyer, you can contact us for a free consultation by clicking here or by calling 949-264-0226.