What is Loss of Rents?
Loss of Rents is an insurance coverage that compensates property owners for the loss of rental income if their property becomes uninhabitable due to damage caused by a covered event, such as fire, storm, or vandalism. This type of coverage ensures that landlords can continue to receive income even when their property is temporarily unfit for tenants.
In the context of property insurance, Loss of Rents is especially important for landlords, as it covers the financial gap that arises while repairs or rebuilding are taking place. Without this coverage, landlords would have to bear the full financial burden of lost income during the restoration period.
For example, if a rental home is damaged by a storm and the tenants are forced to move out for several months while repairs are made, Loss of Rents coverage would help replace the rental income the landlord would have received during that time. This allows property owners to manage their finances effectively without suffering from unexpected gaps in income.
Property owners should consider this coverage as part of their broader property insurance policy, especially if they rely on the rental income to cover mortgage payments or other expenses.