Key Takeaways
- Loss of rents replaces the rental income itself while a covered loss makes the property uninhabitable.
- It is often optional — the most commonly missing coverage on real-world landlord policies.
- It pays fair rental value: your lease amount, or documented booking revenue for STRs.
- It does not cover tenant default or vacancy — only income lost to covered property damage.
Every landlord coverage protects something you own. Loss of rents protects something better: the reason you own it. When a kitchen fire, a burst pipe, or a windstorm makes your rental unlivable, the mortgage, taxes, and insurance keep billing you — while the rent stops. Loss of rents (also called fair rental value coverage) is the piece of a landlord policy that keeps the income arriving during repairs.
How it triggers
Three conditions, all required:
- A covered peril damages the property (fire, wind, water damage from a burst pipe — whatever your form covers; see DP-1 vs DP-2 vs DP-3)
- The damage makes the unit uninhabitable — tenants legally can’t or reasonably shouldn’t stay
- You actually lose rent during the restoration period
What it never covers: a tenant who stops paying, a unit sitting vacant between leases, or income lost to an excluded peril (flood damage needs flood insurance — our flood family handles that).
What it pays, and for how long
Payment is based on fair rental value — for a long-term rental, effectively your lease amount, minus expenses you avoid while empty. Policies pay for the reasonable restoration period, typically capped at 12 months (24 by endorsement with some carriers). On a $2,400/month rental, a five-month kitchen-fire restoration is a $12,000 difference between a policy with loss of rents and one without. The premium difference is usually the cost of a nice dinner.
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The short-term rental version
For Airbnb/VRBO properties, loss of income coverage works from documented booking history, comparable seasonal occupancy, and market rates rather than a lease. That documentation requirement is real: platform booking receipts and payout records become your proof of income at claim time. Hosts should save them monthly. Full detail in the STR insurance guide.
Getting it right on your policy
- Check the declarations page for it by name — “loss of rents” or “fair rental value.” Absence is an answer.
- Size it to the real rent roll — a $10,000 limit on a $2,400/month unit is four months of a six-month problem.
- Ask the cap question: 12 months or 24?
- Document rents — leases, deposits, booking payouts. Claims pay what you can prove.
We include loss of rents on every quote we send. It’s the difference between an inconvenience and a mortgage crisis, and it’s too cheap to skip.
Loss of rents FAQ
How long does loss of rents pay?
Does it pay if my tenant just stops paying rent?
How is the payment amount determined?
Is loss of rents included automatically?
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