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Loss of Rent Cover in Home Insurance

Loss of Rent (LOR) coverage is a significant feature of a home insurance policy for landlords. This additional coverage offers peace of mind and adequate financial security if there is a rental income loss due to damage to the property from the insured perils. On this page, you will learn everything about LOR or Loss of Rent coverage in a home insurance policy.

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What is a Loss of Rent (LOR) Cover in Home Insurance?

Loss of Rent (LOR) cover in home insurance is exclusively designed for landlords to maintain their rental income during the crisis. Basically, it reimburses homeowners for the income they lose when their rental property becomes uninhabitable due to several unforeseen risks, such as fire or flood.

Let's understand this with the help of an example:

As a landlord, your rental property was damaged in a severe storm, making it unfit for three months while repairs are underway. During this period, you cannot receive rent from your tenants who reside there. If you have a loss of rent coverage in your policy, it will compensate you for the rental income you've lost during the three months of the repair period.

Features of Loss of Rent (LOR) Cover in Home Insurance

Here are some of the critical features of Loss of Rent (LOR) cover in home insurance:

  1. Rent Differential
    As a landlord or homeowner, you are covered for the rental income you might collect when your rented property becomes uninhabitable.
  2. Calculation of Lost Rent
    To calculate the amount of lost rent, you must know the sum insured, the period necessary for repairs, and the chosen loss of rent period.
  3. Coverage Duration
    Loss of rent cover offers protection for the duration it takes to repair your damaged home, up to the period determined by the insurer from the day the damaged home becomes unfit for living. However, to get coverage under this, you must provide a certificate from an architect or the local authority claiming your damaged home is not fit for residence.
  4. Claim Process
    To raise claims under loss of rent coverage, the physical damages caused to your home must first be accepted under the home building cover.

Why Do You Need Loss of Rent (LOR) Cover?

Here are a few pointers explaining the reason why you should buy Loss of Rent cover:

  • Financial Protection: It offers financial protection to landlords who rely on their rental income as a primary source of revenue. With this cover, the landlords or property owners get coverage if their property becomes uninhabitable or unfit due to damages caused by fire, flood, or other insured perils.
  • Uninterrupted Cash Flow: Loss of rent cover ensures landlords continue receiving an uninterrupted income even when their property is under repair. Hence, it bridges the gap between the loss of rental income and the time it takes to repair/rebuild the insured property.
  • Covered Events: Loss of rent cover typically covers the specified events mentioned in a home insurance policy. It may include risks like fire, explosion, storm damage, vandalism, and other perils. Hence, as a landlord, if you are planning to buy this, carefully review the policy inclusions and exclusions to understand the extent of coverage provided.
  • Maintenance of Financial Obligations: Landlords can fulfil their several financial obligations by having this cover. It may include mortgage payments, property taxes, and maintenance expenses that may required to pay during the crisis.

Final Words!

As discussed, a loss of rent cover in home insurance plays a vital role for landlords. It offers financial security when properties become uninhabitable due to covered perils. It ensures an uninterrupted income flow when the house is under repair. Moreover, it allows landlords to fulfil financial obligations during such crises.

Written By: PolicyBazaar - Updated: 09 May 2024
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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Reviews & Ratings

4.4 / 5 (Based on 120 Reviews)
(Showing Newest 10 reviews)
Virendra
Bokaro, July 26, 2022
Coverage for natural calamity
I was looking for an insurance policy that provides me coverage for natural calamity. Since my house is located near a river and it floods my area in the rainy season. So i went on the Policybazaar website and particularly look for this coverage found the exact plan that provides this coverage.
Sunil
Bilaspur, July 26, 2022
Premium Calculation
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Bikaner, July 26, 2022
Natural Calamity cover
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Amritsar, July 26, 2022
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Ajmer, July 26, 2022
Qiuck claim
I purchased a home insurance policy recently. However, due to a natural calamity, my house was damaged as the pressure of the water because of flood broke the enterance door of my house. But the insurance plan that i bought got me covered and i as able to get the quickest claim possible.
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Delhi, July 26, 2022
Natural calamities covered
I bought a home insurance policy recently. As i live near a river and in the rainy season, my area gets flooded so in order to protect my house and its contents, i purchased the insurance to get coverage for such natual calamities and i am tension free now.
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Kolkata, July 26, 2022
Wide coverage
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Ahmedabad, July 26, 2022
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Amritsar, June 09, 2022
Natural calamities covered
I bought a home insurance policy recently. As i live near a river and in the rainy season, my area gets flooded so in order to protect my house and its contents, i purchased the insurance to get coverage for such natual calamities and i am tension-free now.
  • Disclaimers+

    #Savings of 28% are based on the comparison between the highest and lowest premiums for a pucca building with sum insured of >₹ 1 crore at Delhi, for property age less than 5 years and policy term of 11 years.

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