Our client has a commercial building which had an empty apartment for rent. He has business income coverage with the rental value option under form CP 00 30 10 91. The building burned. Should loss of rents be covered even though the apartment was vacant at the time of loss? The apartment could have possibly been rented out a week later had it not been for the fire.

Pennsylvania Subscriber

The business income coverage form covers "rental value" where that option is shown in the declarations. "Rental value" is a term specifically defined in the policy. The definition of that term is the "total anticipated rental income from tenant occupancy."

This means that adjustment of claims of this type will depend upon proof of what is a reasonably anticipated rental income. For example, if the apartment had gone unrented during the entire year prior to the loss, and the insured had no real prospects for its rental, it is not reasonable to anticipate rental income. If, however, the apartment had been rented consistently prior to the loss, and had only recently been vacated, or if the insured has verifiable prospects for a speedy re-rental, then it is appropriate to anticipate rental income.

Therefore, the particular facts of your situation will have to be evaluated in light of this definition.