6 Best Practices for Real Estate Owners During this Time of COVID-19
While the landscape seems to be changing daily, the Real Estate Team at Assurance is working diligently to keep our real estate clients and prospects apprised of critical updates relevant to their business. Below are our most critical recommendations.
- Track Your Losses – Track the loss of rents, lost revenues and lost time. While we all have the understanding that most policies do not provide any business income coverage in this event, there is a consensus among industry leaders that the federal government will issue a relief plan for real estate owners in the future. It may be something like a tax credit or other tax deferral/forgiveness program. It will likely be based on losses. So, keep track!
- File the Business Income Claim – We recommend that insureds file these claims, even where there is a specific policy exclusion. If governmental insurance directives or future case law allows carriers to identify claimants and provide relief, you want to be counted in.
- CARE Act – Here is a link to the Real Estate Provisions of the CARES Act from the National Law Review.
- Force Majeure and Impossibility of Performance - Case law throughout most of the country tells us that these contract provisions are typically narrowly construed and enforced. Check the context of the contract where these terms are used before assuming they will come into play. Many force majeure clauses do not correspond to payment of rent. Work with tenants on a case-by-case basis to get through the next few months. Avoid the courts if you can. It will be a long-term mess.
- Directors/Officers and Errors/Omissions Policies – Check in on your claims made policies. Many of these policies don’t currently include a viral/communicable disease exclusion. The exclusions will be added at renewal. Check the notice requirement in the policy and be sure to craft your Notice of Circumstance letter in accordance with the policy requirements before sending into your insurance carrier. You want to reserve your right under the policy in the event of a future claim.
- Vacancy – Many carriers are rolling out endorsements or waiving vacancy provisions. If vacancy is becoming an issue for you, work with your insurance broker to understand your carrier(s) current position on this issue.
The Coronavirus pandemic is changing rapidly. These are our recommendations as of April 2, 2020. If you have any questions, or additional information to share, please reach out directly to your ‘A’ Team member or Jessica Niehaus, Vice President Real Estate Practice, at firstname.lastname@example.org.
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