By STEVE YAHN, who has written for and edited national publications for more than 30 years
It is possible to obtain loss of profits on a property policy, however.
"That's really the business interruption part of your exposure," said Sandi Sikora, head of the real estate division at Irvine, Calif.-based DLD Insurance Brokerage Inc. "Loss of profits comes into play if you have standing inventory waiting to be sold and loss happens that stops you from being able to sell a home.
"This type of loss can be devastating if you were relying on that profit to continue building out the rest of the project," she added. "With loss of profits coverage, you can recoup those profits and rebuild the home."
Added Scott Jensen of the Birmingham, Ala., office of AmWINS Group Inc.: "There is business exposure on some buildings, typically retail and office exposures, for loss of rent. The other issue is leased space: i.e., store signs lease in which property owners can lease out the space on a sign they own.
"Take the example of an owner who was supposed to be receiving rent by a certain day and now they do not have rental income coming in," Jensen noted. "It is still a soft cost, but it is specifically listed as loss of rent on the soft-cost breakdown. It is the same in a leased office building or any type of building that is leased to a tenant."
Concluded Jensen: "The only way this coverage is paid out is if it is due to a covered loss--wind, fire, earthquake or any peril listed in the builder's risk. The economy is not a reason."
July 1, 2009
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