Fair Rental Value Coverage

Fair rental value coverage is a type of coverage in a landlord insurance policy. It may help replace lost rent payments if the property you are renting out is temporarily uninhabitable after a covered claim. This protection is sometimes referred to as fair rental income protection.

Rental property owners need multiple kinds of home insurance to protect their rentals and finances—if a disaster strikes.

From landlord liability insurance and dwelling fire insurance to rent guarantee insurance, landlords have a lot of considerations when it comes to insuring a rental property. One important yet lesser-known policy is fair rental value coverage.

This type of insurance can help recover lost rental income if the property is uninhabitable due to a covered peril. This post will discuss fair rental value coverage in detail, including what's covered and not covered and how the rental value is determined.

What is Fair Rental Value Coverage?

If you own rental property, you probably have a homeowner's insurance policy to protect your investment. What if something happens to the property, like it's badly damaged by a storm, forcing your tenants to relocate temporarily? You'd lose rental income for a period.

Fair rental value insurance ensures you don't lose rental income if the property becomes uninhabitable due to a covered claim.

With fair rental value coverage, the insurer pays your rental income while the property is being repaired or rebuilt after a covered loss. It provides a financial safety net for landlords, ensuring their rental income is not interrupted.

For example,

Say you let out a space in your building for $1,500 a month. One day, fire damages that portion of the building, forcing the tenant to vacate for three months when the house is being repaired. If you have a fair rental value policy, you could make a claim to cover $4,500 in lost rent.

What Does Fair Rental Value Cover?

Fair rental value coverage only covers lost rental income. It doesn't cover damages to the property. Property damages are usually covered under your landlord's insurance policy.

Fair rental value coverage, whether under the homeowner's or landlord's insurance policy, only provides coverage until the repairs are completed, and the property is inhabitable again, or up to one year—whichever comes first.

What Fair Rental Value Doesn't Cover?

Fair rental value coverage doesn't pay for lost rental income if the cause of the damage is not a covered peril in your policy.

For example, home insurance policies generally don't cover flooding. So, if your rental property incurs flooding damage and tenants are forced to relocate temporarily, the insurer won't pay for your lost income.

It's also important to note that the fair rental value coverage applies to the property owner, not the tenant. That means if the tenant is forced to relocate due to the incident, this policy won't cover their living expenses.

How Is Fair Rental Value Determined?

When you make a fair rental value coverage claim, the insurer will, in most cases, determine your payout based on the amount you were charging for rent before the loss. Sometimes, your payout may be based on the market value of similar rentals in your area.

There's also a limit to how much the insurer will pay for any single claim. For landlord insurance policies, the limit is usually 20% of your unit's dwelling coverage. That means if you've $500,000 in dwelling coverage, you can claim up to $100,000 for fair rental value reimbursements.


Fair rental value coverage is a type of insurance that helps landlords recover lost rental income if the property is uninhabitable due to a covered claim. This insurance only covers lost rental income, not damages caused by the covered peril.

On landlord's policies, the coverage is usually 20% of your dwelling coverage limit, which is basically the amount of insurance on the property.

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