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Loss of Rent
Insurance

Protect your rental income when insured property damage forces tenants to vacate or prevents you from leasing the premises.

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01 / Overview

What Is Loss of Rent Cover?

Loss of rent cover under an ISR policy protects property owners against the financial impact of lost rental income when an insured event - such as fire, storm, flood or other covered peril - renders the property uninhabitable or unusable, forcing tenants to vacate.

For landlords and property investors, rental income is often the primary return on their investment and the means by which they service mortgage repayments, pay rates and maintain the property. When that income stream is interrupted by a major damage event, the financial consequences can be severe - particularly if the property requires months of repair or rebuilding before tenants can return.

Loss of rent cover is designed to bridge this gap, indemnifying you for the rental income you would have received during the indemnity period while the property is being restored. The intent is to help the investment keep meeting its financial obligations while the property is temporarily out of commission, subject to the policy terms and the declared rental value.

02 / Inclusions

What Is Covered?

  • Lost rental income from tenanted properties rendered uninhabitable by an insured event
  • Rental income lost when damage prevents new tenants from occupying a vacant property that was being marketed for lease
  • Recoverable outgoings no longer payable by tenants, including council rates, water charges and body corporate fees
  • Reduction in rental income where partial damage reduces the lettable area or amenity of the property
  • Lost rent during the period required to demolish, rebuild or repair the damaged property
  • Rental income lost due to denial of access when neighbouring property damage prevents tenants from reaching your premises
  • Additional costs incurred to minimise the period of lost rental income, such as expedited repairs
  • Auditors' and accountants' fees for preparing the loss of rent claim
03 / Exclusions

Common Exclusions

Loss of rent cover responds to rental income lost as a direct result of insured property damage. The following are commonly excluded:

  • Rental income lost due to tenant default, insolvency or lease disputes unrelated to property damage
  • Vacancy periods not caused by an insured event (e.g. market conditions, property being between tenants)
  • Rental income from properties that were vacant and not actively being marketed for lease at the time of damage
  • Loss of rental income beyond the declared indemnity period
  • Rent increases or lease escalations that were not yet in effect at the date of the loss
  • Losses arising from events excluded under the property damage section of the policy
  • Government acquisition, resumption or compulsory purchase of the property

Accurately declaring your expected rental income and selecting an appropriate indemnity period are critical. The indemnity period should allow sufficient time for the property to be fully repaired or rebuilt, including allowances for council approvals, construction delays and re-letting the premises. Underestimating these timeframes can leave you exposed.

04 / FAQs

Loss of Rent FAQs

Loss of rent cover is typically arranged by the property owner (landlord), as they are the party who suffers the financial loss when rental income ceases. The landlord insures the rental income they would have received had the property not been damaged. Tenants should arrange their own business interruption cover to protect their revenue and ongoing expenses during the period they cannot trade from the premises.
The sum insured should reflect the total gross rental income you could reasonably expect to receive during the indemnity period, including any outgoings recoverable from tenants. For example, if your property generates $200,000 per annum in rent and you select a 12-month indemnity period, your sum insured should be at least $200,000. If the property has multiple tenants, include the combined rental income from all leases.
Yes, loss of rent cover can extend to include recoverable outgoings that tenants would normally reimburse - such as council rates, water rates, body corporate levies, land tax and building insurance premiums. When these outgoings are no longer recoverable because the tenant has vacated, they form part of your insured loss.
If only a portion of the building is damaged and some tenancies remain unaffected, loss of rent cover responds proportionally. You can claim for the rental income lost from the affected tenancies while continuing to collect rent from unaffected areas. The policy indemnifies you for the actual loss sustained, not a blanket amount.
05 / Related

Related case studies

Case Study

Mixed-use commercial & short-stay, Eastern Sydney

Multi-tenant rental income protection in a mixed-use Sydney building.

 Case Study

Mixed-use heritage building, Inner West Sydney

Long rebuild timeframes drove a longer indemnity period for this landlord.
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Expert Review: 18/04/2026

Verified by ISR Insurance Specialists