A few scenarios with some contrasting considerations:

Simple & traditional loss of rent claims are being paid as if COVID-19 did not exist — the lease indemnifies the landlord. Thus the contract should sustain (through to the insurance contract indemnification, which is usually 12 months plus some consideration of an extended or "ramp-up" period).
- However, if the insured/landlord provided rent abatements during the pandemic without a definitively documented end date, there may be justifiable reasons to consider reducing the gross rental income loss for a commensurately applicable amount.

Some businesses, such as buffets, moved to "per plate" pricing resulting in nearly double historical profit margins;
- Others have turned to and become critically dependent on delivery (e.g., Uber Eats, GrubHub, etc.).
  - Movement such as this has financially resulted in lower in-house payroll but a similar expense for the delivery fees.
- Others have expanded their seating areas and respective capacity by absorbing sidewalk and/or parking lot space.
- While others only made 50% of what they did pre-COVID-19, especially due to the capacity restrictions.
  - We note Miami's restrictions have been much more lenient than New York City and Los Angeles.

Hotels, especially in NYC and other tourist-dependent locations, are in dire straits;
- While others managed to sustain by accepting COVID_19-quarantined occupants.

Manufacturers will need to document high utilization (minimal capacity) at the time of loss, to support the claimed lack of sales revenue.
- Key customers and support for purchases via sales orders will be important documentation to have available.

When assessing a BI claim, traditionally, the financial history over a 12-24-month period would be assessed. However, due to COVID-19, many deviations from historically "normal" operations exist across industries, as alluded to earlier.

Special Reports /

Assessing business interruption claims for real estate owners

Related Stories

Recommended For You