All Topics / Commercial Property / Commercial rent default insurance?

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  • Profile photo of fxdaemonfxdaemon
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    @fxdaemon
    Join Date: 2013
    Post Count: 114
    September 8, 2016 - 10:25 pm

    Hi experts,

    I have been asking around few insurance brokers about commercial rent default insurance for situation of tenant
    run away, bankruptcy etc.nBut have had no success at all.

    Anyone can help?

    Thanks
    FXD

    • This topic was modified 7 years, 7 months ago by Profile photo of fxdaemon fxdaemon.
    Profile photo of bclarkebclarke
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    @bclarke
    Join Date: 2013
    Post Count: 7
    September 12, 2016 - 1:47 pm

    I work with EBM, one of the leading privately owned insurance brokers in Australia. We have an exclusive product for commercial properties that should fit what you are after. Although we have done residential landlord insurance for over 25 years the commercial product is only very new and we haven’t done a full release of it as yet, but I can get someone to talk to you about it if you wish and they can certainly arrange it. If you would like me to get someone to contact you just send me a private message with your best contact number.

    bclarke
    Email Me

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856
    September 16, 2016 - 7:31 am

    CGU Padlock also has provision for LL insurance, ask your broker.

    If you already hold a 3 month bank guarantee or cash bond do you really require additional security?

    In over 30 years association with commercial property ($x00,000,000 under management), I have seen very few instances where it may have been useful.

    I have inquired but even my broker has not put forward any justification fot it. Money best kept in your pocket.

    Profile photo of fxdaemonfxdaemon
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    @fxdaemon
    Join Date: 2013
    Post Count: 114
    September 16, 2016 - 12:38 pm

    Thanks guys.

    I guess choosing the right tenant is the key here. However, I’ve seen many retail businesses suddenly
    close shops without any tell tale sign even for some popular franchise brands.

    Although by right outgoing tenant should (must?) find and re-assign the lease to new tenant in reality
    how often does that actually happen?

    Therefore, I really want to understand what mitigations available to minimise the loss before I get
    into the retail sector of the market. I am not 100% sure what seems to be over heated retail sector
    translates to more stable and constant cash flow is my main concern.

    Thanks,
    FXD

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
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    September 16, 2016 - 3:53 pm

    Retailers don’t suddenly go belly up. There are plenty of twll tale signs – rental arrears, lack of stock, decreasing freshness of product, cleaning issues, decreased opening hours, staff reductions etc.

    Other mitigations available include director or franchisor guarantees.

    Retail leases often have provisions for the reporting of monthly turnover and annual audits – this orovides valuable insights into the business.

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856
    December 16, 2016 - 3:41 pm

    @tim George – & your point is???

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