Q

A multi-unit apartment building owned by one of our insureds was damaged by fire. Six apartments received varying degrees of damage. The owner carried coverage for rental value and extra expense with a period of indemnity extension on the rental value coverage. The loss of rents claim was paid. However, the insurance company denied payment for loss of rents after repairs were completed, even though some apartments had not been immediately reoccupied.

I believe the loss of rents coverage should continue until the apartments are again rented, assuming the insured acts with due diligence to attract tenants. What is your opinion?

Illinois Subscriber

A

The period of indemnity extension should provide coverage for the extended loss. The endorsement provides coverage for up to an additional 180 days after repairs are completed—as stated on the endorsement that was provided—for the actual loss sustained by the insured that arises out of the business interruption. This provides time for the insured to regain tenants after repairs are done. Keep in mind, however, that the insured must prove the loss and also make reasonable attempts to rent the apartments as soon as possible.