Protect the rent and the loan after a loss.

Across 2,379 large industry claims notified between 2017 and 2021, the average business interruption property claim exceeded 3.8 million euros, up from 3.1 million in the prior five-year period. For claims over 5 million euros, a property claim carrying a business interruption component averaged more than double a property-damage-only claim. Source: Allianz Commercial Global Claims Review, November 2022. These are global figures in euros, not a US average.

Why it matters more than owners think

Debt service, payroll, taxes, and investor distributions do not pause because a fire closed the building. Rental value coverage is what keeps those obligations covered while the property is rebuilt. Without it, a covered property loss becomes a cash-flow crisis on top of a repair, and the loan does not wait. For any owner whose obligations depend on steady rent, this is core coverage, not an add-on.

The trigger and the period of restoration

Two details decide whether the coverage works: the trigger and the time limit. The trigger is usually direct physical loss from a covered peril, so an interruption with no covered physical damage, a tenant leaving, a market downturn, may not be covered. The period of restoration caps how long the coverage pays, and a serious rebuild can outlast a short limit. Setting that period to a realistic rebuild timeline is the part owners most often get wrong.

The form, and the four numbers that decide your recovery

On an ISO policy this coverage sits on CP 00 30 10 12, the Business Income (And Extra Expense) Coverage Form. Four provisions in it decide what you actually collect, and three of the four are routinely confused with each other.

72 hours, and it is two different 72 hours. The period of restoration for business income begins 72 hours after the direct physical loss. Separately, under A.5.a Civil Authority, if a civil authority bars access to your premises because of damage to a property within one mile, business income starts 72 hours after that action and runs up to four consecutive weeks. Extra expense under Civil Authority starts immediately.

60 days is Extended Business Income. Under A.5.c, when you reopen, income does not snap back to normal. The form covers the shortfall for 60 consecutive days after operations resume. It does not cover a slow market generally, only the loss that traces to your interruption. If 60 days is not enough for your business, E.4 Extended Period Of Indemnity is the provision that replaces the number 60 with a longer one shown in the declarations. That is the correct thing to ask for by name.

120 days is not a waiting period. It is E.1 Maximum Period Of Indemnity, an optional coverage that caps your recovery at the 120 days immediately following the start of the period of restoration and suspends coinsurance in exchange. On a building that would take longer than four months to rebuild, choosing it trades away the coverage you most need. It is worth knowing which option is on your declarations.

The coinsurance base is forward-looking. Under D, your limit has to be at least the coinsurance percentage multiplied by net income plus continuing operating expenses for the 12 months following inception or the last anniversary, not the 12 months behind you. A building that just signed a large lease is under-insured against next year, which is the year the form measures.

A landlord whose tenant carries the income exposure should know the endorsement that names the landlord on the tenant's policy is CP 15 03 06 07, Business Income, Landlord As Additional Insured (Rental Value).

How we handle it

We size the limit to your actual rent roll and continuing expenses, set the period of restoration to a realistic rebuild timeline for the building, and confirm the trigger matches the catastrophe exposure you actually face, including extended timelines after a wildfire, hurricane, or major water loss.