Loss Of Rent Explained: How Landlord Insurance Handles Property Damage

​As a landlord, protecting your rental property means more than just insuring the building — it also means safeguarding your rental income. If your property becomes uninhabitable due to a covered peril like fire, storm damage, or a burst pipe, you could face months without rent from tenants. That’s where Loss of Rent coverage, also known as Fair Rental Value coverage, comes in. This essential feature of landlord insurance can help replace lost income while repairs are underway, ensuring you’re not financially left behind.

What Is Loss of Rent Coverage?
Loss of Rent coverage is a component of a landlord insurance policy (also called a dwelling policy) that reimburses the landlord for lost rental income if a covered event causes damage that makes the property temporarily unlivable.

For example:

• A kitchen fire damages an apartment unit, and the tenant must move out during repairs.
• A windstorm breaks windows and causes water damage, making the home unsafe to occupy.

If these events are covered by your landlord policy, Loss of Rent coverage would pay for the rental income you would have received had the property been habitable.


What Types of Damage Are Covered?
Loss of Rent applies only if the property is uninhabitable due to a covered peril listed in your landlord insurance policy. These typically include:

• Fire and smoke damage
• Wind and hail
• Lightning strikes
• Burst pipes or water damage (not from flooding)
• Vandalism or malicious mischief
• Certain types of explosions or falling objects

It’s important to note that damage must be sudden and accidental. Gradual wear and tear, maintenance issues, or tenant-caused problems not reported in time may not qualify.


What Loss of Rent Does NOT Cover
Like all insurance policies, there are limitations. Loss of Rent coverage typically does not apply if:

• The tenant simply stops paying rent (you may need rent guarantee insurance for that).
• The damage is due to excluded perils like flooding, earthquakes, or mold (unless separately insured).
• You voluntarily decide to renovate or keep the unit vacant.
• You’re unable to re-rent the property due to market conditions, not physical damage.

Tip: Pairing Loss of Rent coverage with additional policies like flood insurance or landlord legal expense protection can help fill potential gaps.


How Much Coverage Is Provided?
The amount covered usually matches the fair market rental value of your property — typically based on your lease or local rental rates. Most policies include Loss of Rent coverage as a percentage of the dwelling coverage (e.g., 20% of the insured value of the building), but you can often adjust this limit based on your rental income and risk exposure.

Example:
If your policy covers your rental home for $300,000 and includes 20% Loss of Rent coverage, you’d have up to $60,000 in rent reimbursement during qualifying repair periods.


Steps to File a Loss of Rent Claim

1. Document the damage with photos and a detailed description.
2. File a claim with your insurance provider as soon as the damage occurs.
3. Verify the property is uninhabitable with an adjuster or repair estimate.
4. Provide lease agreements or rental history to support your claim.
5. Work with contractors to get repairs started and the unit back in service quickly.

Why Landlord Insurance — and Loss of Rent Coverage — Is a Must
Being a landlord involves managing risk, not just collecting rent. Landlord insurance protects your physical investment (the property) and your financial investment (the rental income). Without Loss of Rent coverage, even a minor fire or storm could leave you with a mortgage to pay — and no rental income to help cover it.

This coverage is especially important for:

• Landlords with only one or two rental properties
• Those who rely on rental income for cash flow
• Property owners in regions prone to severe weather or seasonal hazards

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Final Thoughts: Don’t Let Property Damage Derail Your Rental Income
Loss of Rent coverage ensures that when your property needs time to recover from damage, your income doesn’t take a hit. It’s an often-overlooked but powerful feature of a comprehensive landlord insurance policy — and one that can mean the difference between financial hardship and business continuity.

At Affordable Choice Insurance Brokers, LLC, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (703) 347-6151​ or CLICK HERE to request a free quote.

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.