This relates to a modified copy of the ISO Business Income/Extra Expense Coverage form, specifically the following which I am quoting directly from the policy:

7. "Rental Value" means the:

a. Total anticipated rental income from tenant occupancy of the "premises" as furnished and equipped by you, and

b. Amount of all charges which are the legal obligation of the tenant(s) and which would otherwise be your obligations, and

c. Fair rental value of any portion of the "premises" which is occupied by you.

There are two issues:

1. What is anticipated rental income? The insured was renting apartments for a certain amount per month but claims he anticipated increasing the rents to a higher amount, and therefore should be paid based on his much higher anticipated rental figure.

2. The carrier took the position that rental value meant net income plus continuing expenses. The insured's position is rental value means gross rents. What is your opinion?

Kentucky Subscriber

Regarding your first question, the insured must be able to show that he was going to increase rents, such as by producing notices already sent to tenants of the impending increase or advertisements already placed showing the increased rental amount. He may also have to show that such increases were successfully made in the past.

As for the second issue, the carrier's position is correct that rental value is net income plus continuing expenses.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis