2. Fair Rental Value

If a loss covered under Section I makes that part of the “residence premises” rented to others or held for rental by you not fit to live in, we cover the fair rental value of such premises less any expenses that do not continue while it is not fit to live in. Payment will be for the shortest time required to repair or replace such premises.

The definition of residence premises is as follows:

“Residence premises” means:

a. The one family dwelling where you reside;

b. The two, three or four family dwelling where you reside in at least one of the family units; or

c. That part of any other building where you reside; and which is shown as the “residence premises” in the Declarations.

From this, I interpret that FRV is available for coverage on a “residence premises,” but, by definition, this is not a residence premise because the insured does not live in the property; therefore FRV is not covered. Is this a correct interpretation of the policy language?

Florida Subscriber

In order for fair rental value to be an option, the insured must live in part of the building in order for it to be considered a residence premises. For example, the insured lives in the top floor and rents out the bottom floor. The property must be split into at least two residential pieces so that the insured can live in one area and the renter in another. If the insured simply has a rental property, that should be covered separately on a dwelling fire policy. In your situation, no fair rental value coverage applies.