Glossary

Loss of Rents Coverage

Also known as: Rental Value Insurance, Loss of Rental Income Insurance

Coverage that reimburses an owner for lost rental income when a covered property loss renders leased space untenantable, typically for the period reasonably required to repair or rebuild.

This is the standard business-interruption analog for leased-fee CRE (office, retail, industrial, multifamily) where the owner's income stream is contractual rent rather than operating revenue, and it is a required coverage on nearly every institutional CRE loan because debt service must continue whether or not tenants can occupy the space. Lenders typically require the coverage limit to equal at least 12 months of gross rental income (some require longer, or an "extended period of indemnity" endorsement that continues payments after physical repairs are complete but before the property re-stabilizes to pre-loss occupancy), since a building can be physically restored well before its tenant roster and rent roll recover, particularly for single-tenant or anchor-dependent retail assets. A frequent underwriting gap is sizing the limit off net operating income rather than gross rents, which understates the exposure because operating expenses and debt service continue regardless of collections.