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Businesses across the world are continuing to estimate the financial impacts and business interruption caused by “Coronavirus” (COVID-19). As this unprecedented event continues to unfold, it is important to take simple but critical steps to adequately document, analyze and project losses and incremental costs. Regardless of whether recovery is available through potential insurance, contracts, local/federal government assistance or other means, every business must act to document all impacts and losses in a clear, comprehensive manner.
As the number of US coronavirus cases continues to climb towards the 1,000,000 mark, one of the big questions for real estate owners and developers is will state governments suspend rents and commercial mortgage payments for those who have fallen victim to financial difficulties as a result of the pandemic.
The proposed offerings of 90 days or more rent relief for both residential tenants and small business will have a large impact on real estate owners and developers. Will legislation propose not only forbearance but forgiveness of rent payments?
As the pandemic continues to keep various businesses shuttered, it may be necessary to review your policy at length with your broker and potentially legal counsel. Items to be reviewed may include:
- Vacancy Provisions – Continue to protect, secure, and monitor vacant or shuttered units;
- Permission to Occupy provisions in Builder’s Risk Policies – 60-90 days;
- Certain municipalities have stopped providing Certificates of Occupancy. How might this affect the transition from a Builder’s Risk policy to a more permanent property policy;
- Applicable coverage for delays for active construction or renovation projects;
Below please find some helpful resources that will assist you in navigating the process of documenting and measuring the financial impact of COVID-19.
All businesses and organizations - large or small – facing business Interruption and other financial impact from Conronavirus need to calculate and document their losses properly before applying for local or federal grants, insurance proceeds or other areas of potential recover. A few essential action items include:
- Establish a separate account number or charge code in your cost accounting system under which all Coronavirus loss-related costs will be captured.
- Calculate your business’ operating “baseline” - usually a 2-3 year look-back of the business performance to use for comparative purposes during the disruption period.
- Speak to your trusted business advisers, including attorneys, insurance brokers, risk management professionals and CPAs.
- Continue to monitor the news and sign up for local text alerts in your area to stay informed as the situation continues to develop.
- Keep track of all local, state or federal directives that impact your business.
Please be advised that any and all information, comments, analysis, and/or recommendations set forth above relative to the possible impact of COVID-19 on potential insurance coverage or other policy implications are intended solely for informational purposes and should not be relied upon as legal advice. As an insurance broker, we have no authority to make coverage decisions as that ability rests solely with the issuing carrier. Therefore, all claims should be submitted to the carrier for evaluation. The positions expressed herein are opinions only and are not to be construed as any form of guarantee or warrantee. Finally, given the extremely dynamic and rapidly evolving COVID-19 situation, comments above do not take into account any applicable pending or future legislation introduced with the intent to override, alter or amend current policy language.