Property Part 2 – Loss of Rent Insurance

A large claim under your rented residential or commercial property could have wider implications than the material cost to rectify the issue.  What if you are unable to rent out the property during that time?  The loss of rent cover is designed to assist with the financial shortfall whilst you are unable to rent the property out.

There is a common misconception that the loss of rent cover under a property owners contract can extend to cover a gap in tenants, which is not the case.  It’s designed as an extension to a material damage claim under the policy for claims of a more serious nature, such as a fire or flood.  Some policies also cover the cost if your tenant needs to move out and alternative accommodation arrangements for tenants can be included under this section.  It falls under the category of ‘business interruption’ insurance and you may be asked to insure for a specified rental amount or a percentage of the total buildings sum insured, dependent on which insurer you use.

An important consideration under this cover is the time frame in which the insurance will respond.  You will have the options of 12, 24 and 36 month indemnity periods.  Careful consideration needs to be taken when deciding upon this; a detached, modern brick house will be much quicker to rebuild than a listed, thatched property for instance.  The paperwork side of the latter will be more rigorous and the build time much longer too.

If you are unsure of your current arrangement in respect of loss of rent cover, or feel it would be a good time to review your property insurance then contact one of our local offices for more information.