What Is Rent Loss Insurance?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum
If a tornado renders an office building with two rental units unfit for tenancy, the terms of the insurance policy would help offset some of the revenue lost by the landlord.
If a tornado renders an office building with two rental units unfit for tenancy, the terms of the insurance policy would help offset some of the revenue lost by the landlord.

Rent loss insurance is a type of insurance plan designed to protect the interests of the landlord if covered events occur that render the rental property unfit for use by tenants. While the range of covered events provided in the landlord protection will vary, most will offer benefits should some type of natural disaster occur and make the property uninhabitable. Coverage of this type may be offered as a stand alone plan or bundled into a more comprehensive insurance package for individuals and businesses who own and operate rental properties.

Apartment units destroyed as a result of a natural disaster are typically covered in rent loss insurance policies.
Apartment units destroyed as a result of a natural disaster are typically covered in rent loss insurance policies.

The scope of covered events included in rent loss insurance plans provides benefits should a fire, wind, flooding or a fire cause the property to be unsuitable for renting or leasing. For example, if a tornado rendered a duplex with two rental units in the facility unfit for tenancy, the terms of the insurance policy would help offset some of the revenue lost by the landlord, up to a specified period of time. It is not unusual for plans of this type to offer benefits for a period of up to six months after the covered event takes place, providing the landlord with some income as he or she seeks to repair the damage and be able to rent or lease the property once more.

A tenant's personal property is generally not covered under rent loss insurance.
A tenant's personal property is generally not covered under rent loss insurance.

In order to make use of rent loss insurance, the landlord must comply with any conditions set forth in the policy terms. This includes providing the insurance provider the opportunity to assess the degree of damage and determine if some sort of benefit compensation is merited. Claims must be filed according to the instructions provided by the insurer, and the event must clearly be within the terms defined in the insurance plan. Failure to comply with those provisions will lead to a rejection of the claim.

The amount of compensation tendered on a rent loss insurance claim is based on how the policy defines the process for calculating the amount of that compensation. Some plans will call for basing the benefits on an average monthly figure related to the last couple of years of occupancy for the property. Others will base the compensation on factors like the cost of living in the area in comparison to similar rental properties that are located nearby. The basic criteria used to determine the amount of compensation is generally found in the terms and provisions of the rent loss insurance policy, making it easier for insured parties to have some idea of what to expect after filing a claim.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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    • If a tornado renders an office building with two rental units unfit for tenancy, the terms of the insurance policy would help offset some of the revenue lost by the landlord.
      By: Kelvin Cantlon
      If a tornado renders an office building with two rental units unfit for tenancy, the terms of the insurance policy would help offset some of the revenue lost by the landlord.
    • Apartment units destroyed as a result of a natural disaster are typically covered in rent loss insurance policies.
      By: Mikael Damkier
      Apartment units destroyed as a result of a natural disaster are typically covered in rent loss insurance policies.
    • A tenant's personal property is generally not covered under rent loss insurance.
      By: Syda Productions
      A tenant's personal property is generally not covered under rent loss insurance.