Question

Mackey Manufacturing signs a five-year lease at a new location, only to have the building burn down one year into their new lease. Now they have to lease a new property, and the rental prices have increased, so the company now has to pay higher rental costs. Which commercial property coverage form might indemnify Mackey Manufacturing for the difference in lease costs?

a. Property Off-Premises Coverage Form
b. None
c. Leasehold Interest Coverage Form
d. Preservation of Property Coverage Form

Answer 1

The Leasehold Interest Coverage Form can indemnify Mackey Manufacturing for the difference in lease costs caused by the fire.

Step-by-step explanation:

The commercial property coverage form that might indemnify Mackey Manufacturing for the difference in lease costs is the Leasehold Interest Coverage Form.

The Leasehold Interest Coverage Form provides coverage for the financial interest that a tenant holds in a leased property.

It compensates the tenant for any loss of leasehold interest resulting from a covered peril, such as a fire. In Mackey Manufacturing's case, the fire at the new location caused them to incur higher rental costs when they had to lease a new property.

By having the Leasehold Interest Coverage Form, Mackey Manufacturing can be reimbursed for the increased rental costs caused by the fire, helping them recover from the financial loss they suffered.