With the rapid changes the world has seen in the past few weeks, businesses are scrambling to adjust as we go through the uncertainty which accompanies what is being called ‘a global pandemic.’ While we hope the current health scare runs its course quickly, the lasting effects on businesses will be felt for at least the balance of the year. While the long-term impact remains uncertain, in the short run businesses are already asking the questions associated with covering their overhead for the next 30-60 days: where will that money come from? One potential source of additional income may be.........
One potential source of additional income may be your insurance provider. It is important to talk with your insurance provider regarding your unique situation. Most standard industrial/commercial real estate leases (and some mortgage loan stipulations), as part of the general liability insurance policy required of the building occupants, call for building occupants to be insured against Business Interruption(s). Although I am not an insurance expert, this Business Interruption coverage provision will generally provide businesses cash in the event of interruptions to their day to day operations when interruptions were caused by events outside of the company’s control. For any company facing these current financial challenges, it is important to discuss this with your insurance provider to determine what options and benefits are available to you.
As our team has negotiated many leases on behalf of our clients, we have seen this Business Interruption provision included in the insurance requirements of the Tenant’s General Liability Policy. Again, it is important to talk with your insurance provider regarding your unique situation. Most tenants may have quietly had this policy for years and not been aware of the benefit. If you are considering leasing (or selling) industrial space, whether as the Tenant or Landlord, let our team show you how we can leverage our knowledge to create maximum value for you.
Finally, it is important to remember that while this recent worldwide interruption causes challenges for some businesses, it also creates opportunities for those that are prepared. As we face economic, health and political uncertainties in 2020, it is important to remember that we must remain calm, but diligent. Be ready to work hard through this period of uncertainty, but also take some of the extra time we have been afforded to reach out to someone.
Christopher J. Destino, SIOR, a Principal at Lee & Associates, is an engaging, responsive professional who enjoys working closely with his clients and helping them succeed.