Benefits & Claim Scenario

Whether tenants' default on their lease, due to non-payment of rent, is related to a change in industry conditions, overexpansion, unanticipated events, or a downturn economy where it becomes no longer financially viable for a commercial tenant to continue its operations at the leased property, financial impact can be severe when a tenant defaults.

Discover how many thousands of dollars in losses a property oweners and investors can avoid with a Commercial Real Estate Rent Default Insurance policy.

Claim Scenario 1

  • Tenant failed to pay their monthly rent for the amount of $5,000.
  • As soon as a tenant fails to pay the rent, the property owner posts notice to pay rent or quit to the tenant.
  • Despite this fact, the tenant refuses to vacate the property.
  • The property owner initiates the eviction process with an attorney, awaiting a judgment that will allow him to take possession of the rental property/unit and to contract with a replacement tenant.
  • In the meantime, the tenant continues to occupy the property and the property owner is forced to pay the mortgage payments, real estate taxes, property management fees, and any additional expenses in order maintain their investment.
  • The total legal cost to evict the tenant is $2,000.
Description No CRERDI® coverage Coverage reimbursement at 50% Coinsurance Coverage reimbursement at 70% Coinsurance
Month 1 $ 5,000 $ 2,500 $ 3,500
Month 2 $ 5,000 $ 2,500 $ 3,500
Month 3 $ 5,000 $ 2,500 $ 3,500
Month 4 $ 5,000 $ 2,500 $ 3,500
Month 5 $ 5,000 $ 2,500 $ 3,500
Month 6 $ 5,000 $ 2,500 $ 3,500
Legal expenses $ 2,000 $ 500 $ 500
Tenant's leasehold improvements N/A N/A N/A
CRERDI® Reimbursement $ 0.00 $ 15,500 $ 21,500
Property owner''s total out-of-pocket loss (including rent and legal expense) $ 32,000 $ 16,500 $ 10,500
Note Higher coinsurance means higher reimbursement

Claim Scenario 2

  • A restaurant owner, the tenant, signed a 5 years lease that would require a lot of expensive kitchen equipment and interior finishes throughout their space for the amount of $300,000.
  • The property owner agrees to grant the tenant tenant's leasehold improvements of $300,000 and the tenant agrees to pay it back over the term of the lease along with interest.
  • At the end of the second year, the restaurant tenant, informs the property owner that due to financial difficulties he would not be able to pay his monthly rent for the amount of $5,000 and the tenant's leasehold improvements.
  • The property owner posts notice to pay rent or quit.
  • Despite this fact, the tenant refuses to vacate the property.
  • The property owner initiates the eviction process with an attorney, awaiting a judgment that will allow him to take possession of the rental property/unit and to contract with a replacement tenant.
  • The total legal cost to evict this tenant is $2,000.
  • In the meantime, the tenant continues to occupy the property and the property owner is forced to pay the mortgage, taxes, insurance, and other property expenses.
Description No CRERDI® coverage Coverage reimbursement at 50% Coinsurance Coverage reimbursement at 70% Coinsurance
Month 1 $ 5,000 $ 2,500 $ 3,500
Month 2 $ 5,000 $ 2,500 $ 3,500
Month 3 $ 5,000 $ 2,500 $ 3,500
Month 4 $ 5,000 $ 2,500 $ 3,500
Month 5 $ 5,000 $ 2,500 $ 3,500
Month 6 $ 5,000 $ 2,500 $ 3,500
Legal expenses $ 2,000 $ 500 $ 500
Tenant's leasehold improvements $ 180,000 $ 50,000 $ 50,000
CRERDI® Reimbursement $ 0.00 $ 65,500 $ 71,500
Property owner''s total out-of-pocket loss (including rent and legal expense) $ 212,000 $ 146,500 $ 140,500
Note Higher coinsurance means higher reimbursement