What does loss of rents coverage do on a landlord policy?

Loss of rents coverage, sometimes called fair rental value, replaces the rental income you lose when a covered loss makes your property unrentable. It is one of the most valuable parts of a landlord policy because your rental is also your income, and that income stops the moment the property cannot be lived in.

Here is how it works. If a covered event such as a fire, storm, or burst pipe damages the home and your tenant has to move out during repairs, you lose the rent for those weeks or months. Loss of rents coverage pays you that lost rent, typically for the time it reasonably takes to restore the property, so your mortgage and expenses do not eat your savings.

For example, imagine a tornado damages the roof and interior of your Georgia rental house. Repairs take four months, and your tenant cannot stay. At $1,500 a month in rent, that is $6,000 of income gone. Loss of rents coverage reimburses that $6,000 while the home is repaired, minus any waiting period in your policy.

A few key points:

• It only applies when the loss itself is covered. If the cause of damage is excluded, the lost rent is not paid either.
• It usually has a time limit, such as 12 months, or a dollar cap based on your annual rent.
• It does not apply if a tenant simply stops paying or moves out for non-loss reasons.

Setting the limit to match your actual rent and a realistic repair timeline is what makes this coverage work when you need it. To confirm your landlord policy has the right loss of rents limit, request a free coverage review.