Loss of rent

A loss that makes a home, office or commercial unit unusable deprives its landlord of rent, since the tenant is entitled to stop paying or terminate the lease when the leased property is destroyed or unusable. Loss of rent cover indemnifies this lost income during the period needed for repair, within a time limit, often one or two years, and an amount limit. It differs from business interruption, which covers a company's margin, although its logic is the same: making good the loss of income following covered physical damage. It has a variant for owner-occupiers, loss of use, indemnifying the rental value of the property they can no longer occupy, and another for tenants, covering relocation costs. For property investors, whose return depends entirely on rent, the cover is often required by lenders. Underwriting focuses on the actual rent roll, likely reconstruction times, which lengthen after a regional catastrophe, and the strength of the leases, since a tenant who leaves for good extends the loss beyond reconstruction.