Our insured owns a building that is insured for fire, theft, hurricane, vandalism, and earthquake. The policy also provides coverage for business income rental value under the same perils.

The insured's tenant decided to no longer rent this building as of October 31. On November 22, the building was vandalized, and the insured could not rent the building to another tenant. Does the coverage for business income rental value apply?

Puerto Rico Subscriber

Adjustment of claims of this type depend on proof of what is a reasonably anticipated rental income. For example, if the building 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. However, since the building had been rented consistently prior to the loss, and had only recently been vacated, then it is appropriate to anticipate rental income. Rental value coverage should apply if the other elements of a business income loss are met—a necessary suspension of operations during the period of restoration caused by direct physical loss or damage.