As of 2024, landlords own 68.7% of real estate properties in the United States. In Austin, TX, vacancies reached an all-time high until this year. While many vacancies were caused by an increase in supply and waning demand, some were unexpected. In such cases, landlord insurance could provide valuable coverage to help protect your investment.

Does Landlord Insurance Cover Loss of Rental Income?

Landlord insurance can include a provision called "fair rental value," which compensates you for lost rental income if your property becomes uninhabitable. This coverage applies when the property is damaged by events such as storms, lightning, hail, wind, fire, vandalism, or other covered perils outlined in your policy. The insurance will pay the lost rental income for up to one year or until the property is livable again, whichever comes first.

The fair rental value is based on your monthly rent amount. Agents at Armadillo Insurance Agency can also research comparable rent values in your neighborhood to determine the appropriate amount.

However, fair rental value coverage does not cover utility bills, mortgage payments, property taxes, or similar expenses. These ongoing costs are not eligible for compensation under this provision. Additionally, it does not cover property damage or vacancies unrelated to covered perils.

Is Fair Rental Value Coverage Automatically Included?

Not all landlord insurance policies include fair rental value coverage. In some cases, it is offered as an add-on rider, while in others, it is bundled into the policy. To secure this benefit, it must be explicitly included in your policy. If your rental property becomes uninhabitable and you don’t have this coverage, you won’t receive compensation for lost rental income.

Landlords in Austin, TX, should prepare for the unexpected. Landlord insurance provides protection for both anticipated and unforeseen circumstances. An agent at Armadillo Insurance Agency can guide you through the process of obtaining landlord insurance. Our partner carriers offer a variety of plans tailored to your needs and budget. We aim to ensure landlord insurance complements your financial obligations rather than complicates them. Contact us today for more information on landlord insurance.