Loss of Rent

Loss of Rent

What is Loss of Rent Insurance?
Loss of rent cover protects your rental income in the event that your property becomes uninhabitable following an insured event such as a fire or flood, forcing your tenants to vacate the property and withhold their payments to you.

Indemnity Periods
The indemnity period is the length of time you can claim for ‘loss of rent’. 12, 24, or 36 months are usually available and you need to consider what will be enough time to ensure that  you are protected long enough to get things back on track should the worst happen. This could include rebuilding and even finding new tenants. We would strongly recommend that you seek advice from a RICS Chartered Surveyor so you set this at the correct level.

Sum Insured
This needs to reflect the cost of rental income so ensure this is enough and also takes into consideration any future incremental rental uplifts that may occur over the selected indemnity period.

Factors to consider when claiming for loss of rent

These are some considerations for most insurer’s claims relating to loss of rent::

• Has the property been deemed uninhabitable by something that is insured under the policy?
• In what circumstances is the tenant entitled to stop paying rent? This is often referred to as a cessation of rent clause within the lease or tenancy agreement that provides the tenant with a legal right to withhold rental payments from the landlord in the event of damage rendering the property uninhabitable or inaccessible. If there is no clause then the landlord is usually entitled to continue to collect the rent.
• The nature and extent of the damage. It is not the case that any/all damage makes a property uninhabitable.
• The circumstances of the tenant. What may be classed as uninhabitable to one individual or company may not be for another.
• Proof that the tenant has stopped paying rent and documentation to support the amount of rent payable per week/month/quarter.
• What if the property is empty at the time of the loss? Loss of rent may still be considered if evidence can be supplied that the property was at the point of being let.

Want to know more?
If you have any further questions about loss of rent or would like to speak to us about a specialist insurance policy that provides this cover then please call us on 01789 761660.

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