YOU ASK:

What is fair rental value in home insurance?

WE ANSWER:

Fair rental value is a type of home insurance benefit provided by Coverage D of homeowners insurance. Fair rental value is payable when a loss covered by a home insurance policy prevents the residence from being used.

Characteristics of Home Insurance Fair Rental Value

  • Fair rental value is one out of three additional benefits (along with the additional living expense benefit and the prohibited use benefit) that are provided by Coverage D of a homeowners insurance policy. It amounts to 30 percent of the money payable under the part of homeowners insurance covering the residence premises.
  • If a loss occurs to a property or part of a property rented to other people, the owner is eligible to receive compensation for the rent amount lost while the dwelling has not been fit to use. The benefit amount payable is determined by the fair rental value of the lodging.
  • The fair rental value may or may not be equal to the rent payable by tenants. It can vary according to different factors, such as whether the dwelling has been rented to the tenants furnished or unfurnished, whether bills and taxes are included in the rent amount, and whether you provide the total lodging to the tenants. In a nutshell, the actual cash value of the property you rent out is determined by the amount of support you provide.
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