Rental Property Insurance, Fair Rental Value Coverage, Yes or No?

[Lindsey Leavitt]

Hi there, 

I am switching over my 4 rental properties to a new insurance and nitpicking my way through the coverage. Some things will go, others will be added. My question is about the option of the Fair Rental Value Coverage. This coverage will give me up to 12 months of fair market rent value, should my houses be uninhabitable for some covered reason. Because I have paid cash for these properties, I have no mortgage to cover. I also have other channels of cash flow than the rentals, and they are not my main source of income. I'm also thinking that if I need a full 12 months of rental coverage because of something happening to one of my houses, I have bigger fish to fry than that, ha. So, I am considering dropping this option from my policies and wondering if any one else out there has been in this situation and considered the same thing. (I had this with my other policy, but am considering dropping now.) It costs me between $150-200/house, so up to $800 a year total. Would anyone consider this worth it? Does anyone have experience with this type of situation? 

(Background, if needed. 4 Houses valued between $100k and $150k. Rental income averages $1350/house. Located in suburbs of Houston, TX). 

Thank you to anyone who takes the time to chime in!! I'm new here, still getting my self acquainted with the site and appreciate the help! 

[Scott Hohensee]

Several years ago I had a fire in one of my units, the water and smoke damage was extensive the whole building (two unit) had to be gutted and rebuilt. after spending two months of going back and forth with my ins co I finally settled on an amount sufficient to rebuild the building. I acted as the general contractor doing much of the work ourselves, and farming out such work as electrical, insulating, all new windows and drywall.

We spent six months putting this building back into service, well the insurance co said they would only pay 3 months loss of rents because that was the industry standard for that amount of work. and as I said 2 months was spent negotiating for a sufficient and just amount of money for repairs. I had even consulted my lawyer and he said it would be to costly to fight them, and I should probably try negotiating as I did for the initial loss. well I did just that and got them up to 4 months and considered myself lucky.