Waiting for the insurer's estimate
Repairs can't be planned without an agreed scope. An insurance coverage reference service has answered that rent stays owed while the owner waits on the estimate (FC&S on PropertyCasualty360).
Insurance claims for Chicago two-flats and small rental buildings
A burst pipe on the second floor runs into the first. A kitchen fire in the garden unit sends the tenants to a relative's place for three months. You own the building, maybe you live in it, and the rent from the other floors pays the mortgage.
I'm a licensed public adjuster in Illinois and Indiana. I put together the building claim and the lost rent as one file and negotiate both with your insurer.
Unit 1: youowner's floor
The walls, floors and systems go on the building claim. If you can't live there, your hotel and extra costs come from the living expense part of your own policy.
Unit 2: tenantrented floor
The repair is yours to claim. While the unit can't be lived in, the rent you lose is claimed as fair rental value. The tenant's furniture and clothes are on their own renters policy.
Garden unit: emptyheld for rental
An empty unit you were renting out counts too. The policy wording covers a unit rented to others or held for rental.
A drawing of a doorbell panel, not a real building. Your own building may have two units or four, and each one is sorted the same way.
Which policy your building is on
Before anything else I find out which form your insurer wrote. It depends mostly on one fact: whether you live in the building.
A homeowner policy
The standard homeowner form defines your home as a one family dwelling, or a two, three or four family dwelling where you live in at least one of the units. That covers most owner-occupied two-flats and three-flats in Chicago.
- Building
- Coverage A, for the whole structure, every unit included
- Lost rent
- Fair rental value, inside Coverage D, loss of use
- Your hotel
- Additional living expense, also inside Coverage D
- One limit
- Both share the single Coverage D limit on your declarations page
A dwelling or landlord policy
When nobody in the owner's family lives in the building, it is usually written on a dwelling form, often called a landlord or DP policy. Fair rental value has its own coverage line there.
- Building
- Coverage A, for the structure
- Lost rent
- Coverage D, fair rental value, paid for the time needed to repair the rented part
- Limits
- Set by your declarations page and form edition, so I read yours rather than guess
The rent clause, read one phrase at a time
This is the fair rental value paragraph of the standard Homeowners 3 form. Insurers and adjusters argue a rent claim from these exact words. Next to each phrase is what it changes for a building like yours.
If a loss covered under Section I
The damage has to come from a covered cause first. A fire, a burst pipe or wind qualifies. Flood from outside the building doesn't on this form, so rent lost to a flood has no claim here.
makes that part of the "residence premises" rented to others or held for rental by you not fit to live in
The question is whether the unit can be lived in, not whether the tenant chose to stay. A unit without heat, water or a working kitchen in January is not fit to live in, even if the damage looks small.
we cover the fair rental value of such premises
The starting point is the rent in the lease. For an empty unit held for rental, it is what that unit would rent for, shown with your listing and the rent from the unit before.
less any expenses that do not continue while it is not fit to live in
If your lease has you paying the tenant's heat, gas or water, and those bills stop while the unit is empty, that saving comes off the rent. Costs that go on, like the mortgage, taxes and insurance, are not deducted.
Payment will be for the shortest time required to repair or replace such premises
This line decides how much is paid in the end. It is a construction schedule, and it is where most rent claims are argued.
Wording from the HO 00 03 10 00 form on the Nevada Division of Insurance site, Section I, Coverage D. Your policy may be a different edition, and I read yours before quoting it to the insurer.
How the lost rent is figured
There is no table of standard amounts. The number is built from three things, and each one is proved with a document.
Rent in the lease
The monthly rent for each unit that can't be lived in, from the signed lease and your deposit records.
Costs that stop
Only what you no longer pay while the unit is empty, such as heat or water the lease had you supply.
Time to repair
The weeks from the loss until the unit is fit to live in again, written trade by trade.
The first two are paperwork. The third is where a short estimate costs an owner the most, because a scope that leaves out the drywall drying time, the electrical inspection or the cabinets on order also leaves out the weeks they take. I write that schedule as a contractor would, and when the building scope itself comes in short, my page on underpaid claims explains how the missing lines are added back.
What lengthens or shortens the rent period
These five come up on almost every rental claim I see in Chicago buildings.
Permits and inspections
Structural, electrical and plumbing work in Chicago goes through the Department of Buildings. The time for the permit and the inspection belongs in the schedule.
Matching materials
Old plaster, trim profiles and flooring in a hundred-year-old two-flat are often made or ordered. Lead time counts.
The city closes your building
If a civil authority keeps you out because of damage next door, the form pays rent and living costs for no more than two weeks.
A lease cancelled after the loss
The form doesn't pay for a cancelled lease as such. The rent for the repair period is still owed, whoever lives there afterwards.
What to put together for a rental building claim
Owners of small buildings keep most of this already. It needs to be in one place before the insurer's adjuster comes.
| Document | What it proves on the claim |
|---|---|
| Every lease | The rent for each unit and who pays which utility. Together they set the rent and the costs that stop. |
| Twelve months of rent deposits | Bank records showing the rent actually came in. For an empty unit, the listing and the last lease. |
| Photos of each unit | Every room in every unit, including the floors that look fine. Water from upstairs often shows up below days later. |
| Tenant notices | The dates each tenant left and came back, in writing. They mark where the rent claim starts and ends. |
| Mitigation invoices | Water extraction, board-up and drying bills. After a burst pipe, my page on frozen pipe claims covers the heat records the insurer will ask for. |
| Your tenants' own claims | Tenants claim their belongings and their hotel on their own renters policies, since the standard homeowner form leaves out tenants' property. My guide for renters after a fire or water loss in Chicago is a good thing to send them. |
How I work a claim on a building with tenants
I walk every unit myself, including the ones the tenants are still living in, and the basement and roof where the damage often started. Then I read your policy and your declarations page, so we both know which coverage answers for which floor.
I write one estimate for the building and a separate schedule for the rent, unit by unit, and meet the insurer's adjuster at the property. After a fire, the structure, smoke and contents are documented together, as on my page about fire damage claims.
The inspection and policy review are free. If we work together, my fee is a percentage of what the insurer pays on the claim, written into our contract before I start.
- Public adjuster, Illinois No. 19461872
- Public adjuster, Indiana No. 3556317
- HAAG certified inspector
- Licensed roofing and general contractor
- English, Ukrainian, Russian
Tell me about the building
The address, the number of units, which floors were hit and the date. If a tenant has already moved out, say since when.
+1 224-481-2095 volodymyr@staterestoration.usI answer the phone from 7 AM to 7 PM on weekdays and from 9 AM to 5 PM on Saturday and Sunday.
What building owners ask me about rent and tenants
- My tenant moved out for good after the fire. Does the rent stop being paid?
- No. Fair rental value is paid for the time it takes to repair the unit, not for as long as that tenant stays on the lease. A unit that is vacant and listed for rent is covered the same way, because the wording says rented or held for rental.
- Do I need the tenant's permission to file?
- No. The building and the rent are your claim on your policy. The tenant files their own claim for their belongings and their hotel, if they carry renters insurance. Give them your insurer's claim number if they ask; their carrier may want it.
- The insurer wants to pay rent only for the weeks their contractor says the repair takes. Can that be argued?
- Yes. The period is the shortest time required to repair or replace the unit, and that is a construction question. I write the repair schedule trade by trade, including the permit and the wait for materials, and argue it against theirs.
As a public adjuster I represent you, the owner, on the insurance claim. I'm not a lawyer, and questions about leases or tenant law go to an attorney. What the insurer pays depends on your policy and the evidence, so nobody can tell you the result before the claim is settled.