What is loss of rent insurance? A helpful guide for landlords
If your property becomes uninhabitable due to an insured event, such as a fire or flood, and you’re unable to rent it out, it’s a good idea to have the right protection in place. Loss of rent insurance can help cover the income you would otherwise receive if your tenants are forced to move out because the property can no longer be lived in.
In this guide for landlords, we’ll walk you through what you need to know about loss of rent insurance so you can decide if you should get it. From understanding what it is and how it works, to what it covers (and what it doesn’t), we’ll break down the key details. We’ll also look at who should consider the cover and the situations where it can help protect you.
Loss of rent insurance definition
As a landlord of a single buy-to-let property or maybe even a few, you’re probably used to rental payments as regular income. So, what happens when you run into an unexpected event at your property, such as a fire, flood or property damage? Your tenant may have to (temporarily) to move out, potentially leaving you out of pocket if you don’t have the right protection in place.
Loss of rent insurance, or loss of rental receivables insurance, is a type of business insurance specifically designed to help protect landlords if their property becomes uninhabitable due to an insured event. In the unfortunate event that this does happen, it can help replace the rental income you would otherwise have received while repairs are carried out at the property.
What does loss of rent insurance cover?
Whether you own a commercial or residential rental property, loss of rent insurance may be worth considering for landlords who rely on rental income to meet ongoing financial commitments. But what exactly does it cover? Let us explain:
- Lost rental income - It can help reimburse the rental income you would have received, where a valid claim is accepted following an insured event.
- Alternative accommodation - Some policies may include cover for alternative tenant accommodation costs, where you are legally responsible under the tenancy agreement.
Loss of rent receivables is normally sold alongside other covers as part of landlord insurance. It’s worth noting that many insurers only offer cover where the loss of rent results from physical damage caused by an insured event under your policy. Policies vary per insurer and limits and exclusions apply. Always check your own policy wording to see what is and isn’t covered.
What is an insured event?
An insured event is an accidental, unexpected or unforeseen named event on your insurance policy that your insurance provides cover for. It could be an accidental fire, flood or property damage. Here are a few examples:
- Fire - A kitchen fire spreads through the property, causing major smoke and structural damage to the building
- Flood - Heavy rainfall leads to a nearby river bursting its banks, flooding the ground floor of the property, causing structural damages
- Storm - Strong winds during a winter storm rip tiles from the roof, allowing rainwater to damage the building.
Always check your policy wording to see what’s included and excluded. And, for more information on how to prepare your business for storms, floods and bad weather, check out our helpful guide.
Who needs loss of rent insurance?
Usually, loss of rent insurance is included within a comprehensive landlord insurance policy. While it isn’t a legal requirement, it can help provide financial protection for both residential and commercial landlords.
Why is loss of rent insurance important for landlords?
As a landlord, your rental property is a business and you should consider protecting it - just like any other type of business, especially if you rely on the steady income it generates. Here are some examples of how it can help:
Helps protect your cash flow
If your property is damaged by events like fire, flooding or storm damage, tenants may need to move out while repairs are carried out. Loss of rent landlord insurance can help replace lost rental income during a defined period, supporting cash flow. Remember to always check the terms, limits and conditions of your own policy.
Helps cover mortgage payments
Many landlords rely on rental income to cover mortgage repayments for the property and without rent coming in, you could be left paying out of pocket.
Supports long repair periods
Major repairs can take months. Loss of rent insurance for landlords typically covers rental income for a specified period, helping you stay financially stable until tenants can return.
Could give you peace of mind
Unexpected property damage can be expensive enough on its own. Knowing your lost rental income is covered may provide peace of mind while you focus on repairs.
What doesn't loss of rent insurance cover?
While loss of rent insurance can offer a lot for businesses, there are also certain things it won’t be able to cover. It’s always best to check with your insurer exactly what they do and don’t provide cover for. Generally, loss of rent doesn't cover you for periods where the property is unoccupied (unless the tenant has moved out due to the insured event) or if the tenant decides to stop paying the rent. Policies vary per insurer. Always check your own policy terms to see what applies.
Help protect your business against loss of rent with Bionic
If you’re a landlord, having the right protection in place to support your business is an essential consideration.
At Bionic, we know that running a property is a business and we understand the risks landlords face. We can help you compare insurance quotes from regulated providers, so you can choose cover that suits your rental business. Policies vary per insurer, and limits and exclusions apply. Always check your own policy schedule to see what cover is and isn’t included.
We can also help sort other business essentials such as energy, broadband and more.
Loss of rent insurance FAQs
How much does loss of rent insurance cost in the UK?
Premiums will vary depending on property type, location and the amount of cover you need – start a quote online and a broker will be on-hand to talk through your quotes.
How to make a loss of rent claim?
Contact your insurer as soon as damage occurs, provide evidence of what’s happened immediately such as photos and tenant communications and keep repair estimates. Read up on what to do if a tenant damages your property.
How long does loss of rent insurance pay out for?
It's common for insurers to provide cover for a defined period (commonly up to 12 months), but this varies by insurer. Always check your own policy to see what is covered and for how long. Limits and exclusions always apply.
Can commercial landlords get loss of rent cover?
It’s very likely - many insurance providers include this option for landlords who rent out offices, shops and other commercial properties that can be affected by insured damage.
