LEASEHOLD INTEREST COVERAGE is designed for tenants who have more favorable long-term leases than the prevailing rate in the area. It pays the difference between the prevailing rent levels and the current rent being paid following the cancellation of the lease but only when that cancellation is due to direct damage to the building by a covered cause of loss. It covers a variety of up-front amortized costs in addition to the rental or lease difference. The coverage limit decreases based on the length of the lease.

It is important to review the insured's lease agreement to determine what losses could occur that would break the lease and trigger coverage. The lease should dictate the cause(s) of loss for which coverage is purchased.
(Use ACORD Form #140)
Related PF&M Article: Time Element Coverage Forms Overview