What it does
CP 15 03 attaches to CP 00 30 or CP 00 32 in the tenant's policy. The person or entity in its Schedule (the landlord) is insured for loss of "Rental Value", up to the scheduled Limit of Insurance, under the Business Income – Rental Value terms of the coverage form and the conditions of the policy. For this coverage, "Rental Value" is redefined as:
- Net income the landlord would have earned as rental income from the tenant's occupancy of the scheduled premises, as furnished and equipped by the landlord.
- Continuing normal operating expenses that are the tenant's legal obligation and would otherwise be the landlord's obligations.
"Tenant" means the named insured.
Key provisions
- The Schedule shows the rented premises, the landlord's name and address, the Causes of Loss form, the applicable business income form, the limit and the coinsurance percentage.
- Only endorsements named in the Schedule modify the causes of loss for this coverage.
Who needs it
Tenants under leases that make them responsible for the landlord's rent loss after a casualty. This is common in net leases, where rent may abate after a fire and the landlord requires the tenant to insure that income stream.
Quoting and selling notes
- Read the lease. Some landlords insure their own rent loss and only need the tenant to keep paying rent. Others require this endorsement.
- Set the limit from annual rent plus pass-through expenses times the expected restoration period, and check the coinsurance percentage.
- Building property coverage for the landlord is handled by CP 12 19 or CP 12 18, not this endorsement.
