Fair Rental Value

What is fair rental value? This is coverage for when you rent a part of your home or if you own a rented dwelling. There is a possibility you will suffer a loss of rental income from an event such as a fire or an other insured peril such as a windstorm causing a tree to smash into the dwelling. The event that occurs has the effect of making the property unfit for human habitation.

Under your additional living expense section of a property policy there is coverage for you to live somewhere else while your home is being repaired. There is also coverage to pay the rent to you that you would have earned if the loss had not occurred.

What if the suite you rent out is empty at the time of the loss? As long as you can show that you were making a reasonable attempt to rent the property then you will still get paid. The insurance company cannot make the assumption that the property would not have been rented if the loss had not occurred.

What about your tenant? Will your insurance pay for them to live somewhere else? No, the tenant needs to have their own insurance coverage for additional living expense. It is always a good idea to have the tenant keep insurance in force for not only this situation but for any liability claims that might arise. This is better protection for you, the landlord.

When you are setting up your insurance it is important that you let the agent or broker know about any renters you have living with you. It is always a good idea to set up your policy to suit your needs but it can be particularly important when you depend on that rental income to help you make your mortgage payment.