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Glossary > Insurance > Property Insurance > Landlord Insurance
Legal Disclaimers

Fair Rental Value Coverage

Fair rental value coverage is a provision in property insurance that helps protect landlords financially by covering the loss of rental income if a rental property becomes uninhabitable due to a covered peril like a fire or storm. It ensures that landlords can still receive income from their property even if it's temporarily unrentable.

Example #1

If a rental property experiences significant damage from a fire and tenants have to move out during repairs, fair rental value coverage would reimburse the landlord for the lost rental income during the time the property is being restored.

Example #2

During a severe storm, a rental property's roof is damaged, making it unsafe for tenants to stay. Fair rental value coverage would kick in to compensate the landlord for the income lost while the roof is being repaired and tenants cannot occupy the property.

Misuse

An example of misuse of fair rental value coverage could occur if a landlord falsifies repair timelines to extend the amount of time they receive compensation for lost rental income. This misuse is unfair and can result in increased premiums for all policyholders. It's essential to protect against misuse to maintain fairness and prevent dishonest practices within the insurance industry.

Benefits

The benefit of fair rental value coverage is that it provides financial protection to landlords during periods when their rental property is uninhabitable. It helps landlords maintain a steady income stream and recover the costs of repairs without suffering significant financial losses.

Conclusion

Fair rental value coverage is a valuable provision in property insurance that safeguards landlords against financial loss when their rental property is temporarily unrentable. By ensuring landlords receive compensation for lost rental income due to covered perils, this coverage promotes fairness and stability in the landlord-tenant relationship, aligning with CAP's goals of consumer empowerment and marketplace transparency.

Related Terms

Landlord InsurancePerilLoss Of Use

Last Modified: 4/29/2024
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