California Property & Casualty Broker-AgentProperty InsuranceMedium
A client owns a multi-tenant commercial building. They are concerned about the financial impact if a fire makes the building uninhabitable, causing them to lose rental income from their tenants. Which coverage would address this specific concern?
- AExtra Expense Coverage
- BLoss of Rents Coverage
- CLeasehold Interest Coverage
- DBusiness Personal Property Coverage
Show answer & explanationAnswer & explanation
Correct answer: B. Loss of Rents Coverage
Loss of Rents Coverage (also known as Fair Rental Value under some residential policies) specifically reimburses a landlord for the rental income they lose when their property becomes uninhabitable due to a covered peril.
Why the other options are wrong
- A. Extra Expense covers costs incurred to minimize business interruption, not lost rental income directly.
- C. Leasehold Interest covers a tenant's financial loss if their favorable lease is terminated due to a covered loss.
- D. Business Personal Property covers the owner's personal property within the building, not lost income.
Loss of Rents Coverage
A type of business income coverage that reimburses a landlord for the rental income that is lost when their property becomes uninhabitable due to a covered cause of loss.
- For landlords
- Covers lost rental income
- Triggered by covered peril making property uninhabitable
Memory trick: Rents: Receive Rents, Reduce Risk