Property Owners invariably insure the rent themselves even when there is no cessor of rent clause in the lease.

To arrive at the rent sum insured the property owner must select the indemnity period required. The loss can extend beyond the actual period needed to reinstate the premises.

To simplify the rent sum insured calculation we negotiate an uplift for reviews to be built in to the policy to cover increases in rent, which may arise in the future.

This virtually eliminates the risk of underinsurance, avoids the need to disclose any proposed rent increases prior to negotiations, reduces the frequency and avoids the need to amend the sums insured particularly mid- term and is more cost effective as the sum insured is based on the annual rent received at the commencement of the insurance period.

We recommend rent be insured against the same risks as the buildings.

Service charge is covered automatically within the definition of rent and should be included within the base figure when calculating the rent sum insured. In the event of a partial loss the property may become partially untenanted following damage resulting in a reduction in service charge income but not expenditure.

Rent insurance should cover additional costs such as the cost of re-letting the property including legal fees and any other expenditure, which may be incurred to minimise the loss of rent.

The policy should also include an extension for loss of rent and additional costs arising form prevention of access whereby access to the property is prevented or hindered as a result of damage to a neighbouring property.

Where a property is unoccupied and awaiting letting the insurance of rent should be continued to protect future income. Insurers would normally require evidence of the loss of rent attributable to the damage. They will take into account enquiries from prospective tenants, the demand for accommodation in the area and the level of rent being obtained.

In the event of long term unoccupancy and where there is little prospect of finding a new tenant it would prove difficult in the event of damage to show that the building would otherwise have been let. In these circumstances it may be desirable to suspend the rent insurance.