Given that it is now much harder to make an honest profit in
our post subprime mortgage crisis world, should business start-ups avail
themselves of leasehold insurance?
By: Ringo Bones
Although it is the intention of the standard fire insurance
policy to protect against direct losses, protection of indirect losses by
endorsement has since been widely developed. Among the forms of insurance that
have been developed is the leasehold insurance – which can be a business
start-up lifesaver in the austere economic environment of our post subprime
mortgage crisis world.
There may be a lease on the building for a stated number of
years. If the lease states that it is terminated by a fire in a given proportion
of a building and the amount of rent that would have to be paid for similar
quarters is higher than under the lease, then a leasehold insurance may be
obtained by the lessee.
A lessee of a certain business property may have obtained a
lease at a very favorable rental, for example, annual rental may be 15,000 US
dollars for 20 years. However, if the building is destroyed by fire and the
lessee had to obtain other similar premises, he or she might have to pay 18,000
US dollars annual rental. Leasehold insurance is available for a lessee to
protect him or her against the additional cost that he or she would have to pay
under such circumstances.
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