Loss of rent cover may repay rental income a landlord cannot collect while insured property damage is repaired.
Loss of rent is rental income a landlord cannot collect because an insured event has left their property uninhabitable.
For example, a fire, flood or escape of water could mean that a tenant must move out while repairs take place. Depending on the policy, loss of rent cover may repay some or all of the rent the landlord would otherwise have received.
The cover may be included within landlord buildings insurance or offered as an optional benefit. The insurance schedule and policy wording should show whether it applies and the maximum amount the insurer may pay.
A loss of rent claim will usually need to result from damage covered under another part of the policy. It is not normally enough for a property to be empty, difficult to let or between tenants.
For example, landlord policy wording may require an accepted claim for the underlying property damage before loss of rent can be paid.
There must also be a clear link between the damage and the missing rent. In one Financial Ombudsman Service decision, a claim was declined because the tenant had left for reasons that were not connected to the insured damage.
The insurer will assess how much rent has been lost and how long the property could not be occupied. Any payment will be subject to the policy terms and limits.
The limit could be:
Limits vary between policies. In one case reviewed by the Financial Ombudsman Service, the insurer applied a £15,000 policy limit to the loss of rent payment.
Loss of rent and rent guarantee insurance cover different risks.
Loss of rent cover usually applies when insured property damage stops a tenant from living in the home. Rent guarantee insurance usually deals with rent arrears when a tenant cannot or does not pay.
Rent guarantee cover may also include help with certain legal costs. However, it can have separate conditions, such as tenant referencing, affordability checks, reporting deadlines and possession procedures. A Financial Ombudsman Service case study shows why landlords need to follow the specific conditions of rent arrears and legal expenses cover.
A landlord may need both types of protection. This will depend on the property, tenancy and policy.
An insurer may ask for evidence showing that rent was due and has genuinely been lost. This could include:
Evidence showing why the property could not be occupied
The Financial Ombudsman Service has confirmed that insurers may request documents to support and value a loss of rent claim.
Report damage promptly and keep clear records. The policy may also require you to take reasonable steps to prevent further damage and avoid unnecessary delays.
Check which insured events are covered and whether loss of rent is included. You should also review:
Some policies place loss of rent and alternative accommodation in the same section. They may share one limit, or the insurer may pay one benefit instead of the other.
Damage caused by wear and tear, poor maintenance or a gradual problem is often excluded. Restrictions may also apply if the property becomes an unoccupied home for longer than the period allowed by the policy.
We arrange landlord insurance through a range of insurers. Loss of rent cover may be included or offered as an optional benefit, depending on the insurer and the full property details.
Before choosing a policy, check whether you need protection for property damage, tenant arrears or both. Cover, limits and exclusions vary, and any policy will be subject to the insurer’s acceptance and terms.
