Glossary

Fair rental value

Payment for the rent you lose when a covered loss makes a part of your home that you rent to someone else, or hold for rent, unfit to live in.

Also called: FRV, rental income coverage

Fair rental value is the part of loss of use coverage that replaces rent you lose. If a covered loss makes the part of your residence premises that you rent to others, or hold for rental, unfit to live in, the policy pays the rental value of that space, less any expenses that stop while it is unlivable.

Say you rent a basement apartment for $1,400 a month and a kitchen fire makes it uninhabitable for four months. Rent lost is $5,600. If you normally pay $150 a month toward the tenant's utilities and that cost stops, subtract $600, and the claim is $5,000. Payment runs for the shortest time needed to repair or replace the space, and it counts against the Coverage D limit.

Know where it stops. It applies to space within the insured residence, such as a rented room, an in-law suite or the other unit of a duplex you live in. A separate rental house you own elsewhere needs a landlord policy or dwelling fire policy. Fair rental value is lost rent, not lost business profit. And renting space short-term can raise its own coverage questions, so read our guide on what your policy covers when you rent out a room.

Last reviewed October 10, 2026

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Related terms

Loss of use (Coverage D) Coverage that pays extra living costs or lost rent when a covered loss makes your home unfit to live in, such as hotel bills or a tenant's missed rent. Additional living expenses The increase in your normal costs of living, such as hotel bills, restaurant meals and extra mileage, after a covered loss forces you out of your home. Dwelling coverage (Coverage A) The part of a homeowners policy that pays to repair or rebuild the house itself, including attached structures such as a garage, porch or deck. Landlord policy Insurance for a home you own and rent to tenants, covering the building, lost rent and the owner's liability, but not the tenant's belongings. Other structures (Coverage B) Protection for buildings on your lot that stand apart from the house, such as a detached garage, shed, gazebo or fence.

Related guides

Making an additional living expenses claim How to claim living costs while your home is unlivable: the baseline, the receipts, advances, what adjusters question, and how to ask for more time. Dwelling fire policies: DP-1, DP-2 and DP-3 Dwelling fire forms insure a rental, a vacant house or a home that can't get a homeowners policy. DP-1 is basic, DP-2 broad, DP-3 open perils. No liability. Landlord insurance: what a rental property policy covers Landlord insurance covers a house you rent out, lost rent after a fire or leak, and your liability to tenants. What it leaves out and when you need it. Loss of use and additional living expenses (Coverage D) Coverage D pays the extra cost of living elsewhere when a covered loss makes your home unfit to live in. What counts, how long it lasts, and how to claim it. Renting out a room: what your homeowners policy covers Renting a spare room to one or two roomers usually fits a homeowners policy if your insurer knows. What the HO-3 covers, what it excludes, and when to call. Insuring an Airbnb or other short-term rental If you rent a home to short-stay guests regularly, a homeowners policy is the wrong fit. Compare short-term rental policies, endorsements and platform coverage.

Related insurers

Steadily Online landlord insurer founded in 2020 that sells DP-1 and DP-3 rental-property policies in all 50 states, partly through its own Demotech-rated carrier.

Related tools

Additional living expenses (loss of use) calculator Estimate your monthly extra living costs if a covered loss forces you out of your home, and how many months your loss of use limit would last.