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Loss of Rental Income Insurance

One of the most common sought after add-ons or standard features (depending on the insurer) of a landlord insurance policy is Fair Rental Income Protection.


The main bread and butter of a property management operation is the rent that is paid by tenants. But what happens if there is significant damage to a dwelling unit that renders it uninhabitable while it is being reconstructed? As long as the coverage is included in the landlord’s policy, rent payments based on the fair rental value of the unit will be made by the insurance company while the unit is unavailable due to a covered construction claim.

This is a separate and distinct feature to help make up for lost rental income. It does not cover damage or liability, it will have its own monetary limits and term (usually a maximum of 12 months).

Can this coverage be used for regular vacancies?

Fair Rental Income Protection cannot be used if local market conditions are poor and a landlord is having a difficult time getting tenants to apply. It is strictly reserved for supplementing the rental income while the property sits under construction for an approved claim.

Will the insurance company match the rent a landlord charges?

The reason why its often called Fair Rental Income Protection is that the insurance company will determine the fair market value of the dwelling unit’s monthly rent. A local comparable market analysis will be performed and is usually inline with what the landlord charges (unless it is unfair/unreasonable).