What does fair rental value coverage provide?

Fair rental value coverage is specifically designed to compensate landlords for lost rental income when their property is damaged and is in a condition that makes it uninhabitable or unusable for tenants. This type of coverage comes into play after an insured event, such as a fire or severe storm, disrupts the ability to rent out the property. The intent is to ensure that property owners do not suffer financial hardship due to the inability to collect rent while repairs are being made.

In contrast, compensation for property damage focuses solely on the physical repair or replacement of the property and does not address the income loss incurred during the restoration period. Insurance for rental properties generally refers to the broader coverage needed to protect against risks associated with owning rental properties, including liability and property damage, but it does not specifically address the issue of lost rental income. Coverage for unpaid rent would refer to situations where a tenant fails to pay rent, which is different from coverage that compensates the landlord for lost earnings due to property damage.