Loss of Rent insurance

What is Loss of Rent insurance?

If you rent out a commercial or residential property and the property becomes uninhabitable following an event such as a flood or fire, you will still want your rental income to continue.

If you are the freeholder and insure the building, most policies will allow you to add cover for lost rent, ensuring that you do not have a loss in income. You should make sure that the indemnity period is adequate to cover the time it takes to repair or rebuild the property and re-let the premises. In most cases, we would recommend at least a 36-month indemnity period because it can take over a year to even start rebuilding or repair work in the event of a serious or complicated claim.

You can normally select to cover rent for set periods of time, but be careful not to select too short a period or payments will cease before the property is habitable again.

However, if you are a leaseholder and sublet the property, you may not control the building insurance and therefore may not benefit from any loss of rent cover. In these cases, you will need to look at an alternative way of insuring your rent, to ensure you are not left out of pocket. In some cases, we may be able to provide you with stand-alone loss of rent or business interruption insurance; more commonly, we can provide this cover by combining it with other types of insurance.

If you are worried about your tenant not paying their rent for other reasons, such as bankruptcy or financial difficulties, we can look at other options for you, including Rent Guarantee insurance, Legal Expenses Insurance and certain types of Credit Insurance or Bonds.

If you would like help or advice on insuring your rental income, please contact us.