Home insurance can sometimes protect more than the building itself. If you rent out a dwelling or a separate suite, your policy may also cover rental income you lose after a covered claim. This coverage can help when damage makes the rented space unlivable and your tenant cannot stay there while repairs are being completed.
It can. Some home insurance policies include rental income coverage, which helps replace rent you would normally receive from a tenant if a covered event makes the rented dwelling or suite unlivable.
For example, a covered fire or water loss could force your tenant to move out while repairs are completed. If you lose rent as a result, your policy may cover that lost income.
This coverage is meant to replace actual rental income you lose because of a covered claim. It does not provide extra income or pay rent simply because a property is not being rented.
The damage must generally be caused by an event covered by your insurance policy. The damage must also make the rented space unlivable, causing the tenant to leave while repairs are completed.
If the tenant can continue living in the unit and paying their normal rent, there may be no rental income loss to claim.
The amount of rental income coverage depends on your policy. Coverage will typically have a maximum limit based on the rent you receive, often up to 12 months of rental income.
However, this does not mean you automatically receive 12 months of rent after a claim. Rental income is generally covered only for the time the rented space is unlivable because of the covered damage and required repairs.
For example, if the unit can be lived in again after three months, rental income payments would normally end at that point, even if your policy allows for a higher maximum.
Typically, no. Rental income coverage is not designed to provide income for a property that was vacant and not producing rent before the loss.
Vacant properties can also have different insurance requirements and restrictions. If a property becomes vacant, you should speak with your insurance provider.
If you rent out any part of your property, tell your insurance provider. This includes a basement suite, secondary suite, separate dwelling, or even a room in your home.
Rental use can change how a property needs to be insured. Disclosing it allows your insurance provider to confirm whether your policy is set up correctly and explain what coverage is available.
Rental income coverage can be valuable when a covered claim makes a rented dwelling or suite unlivable. However, it is designed to replace actual rent that is lost during the repair period, subject to the limits and conditions of your policy. If you rent out any portion of your property, make sure your insurance provider knows about it. Review your coverage before a loss happens so you understand how your rental income is protected.
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