Imagine one of your rental properties has a major fire. Fortunately, you have property insurance to repair the building—but your tenant has to move out for six months while repairs are completed. The rent stops coming in. Unfortunately, your mortgage payment, property taxes, insurance, and other expenses don’t.
That’s where Loss of Rents coverage, sometimes called Rental Income or Business Income coverage depending on the policy, becomes important. When a covered loss makes a rental property uninhabitable, this coverage can help replace the rental income you lose while the property is being repaired. The key words are covered loss. If the cause of damage isn’t covered by the property policy, the resulting loss of rental income generally won’t be covered either.
Property owners should also pay attention to how much coverage they have and how long it can continue. A major fire, tornado, or other serious loss can take months to repair—especially when permits, contractors, materials, or inspections cause delays. If you own several rental properties, losing months of income from even one building can create a significant hole in your cash flow.
If you own rental property, don’t just look at the amount of insurance on the building. Ask us to show you exactly how your policy handles lost rental income after a covered claim. Insuring the building is only part of protecting your investment. Protecting the income it produces matters too.
Stay Tuned For Other Great Reads In This Month’s Newsletter
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