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Protecting Your Income: Loss of Rental Income Coverage in Property Insurance in Mexico

Published Date: Dec 03, 2023

Protecting Your Income: Loss of Rental Income Coverage in Property Insurance in Mexico

When you own a house or a condominium in Mexico used for vacation rentals, it's essential to be prepared for any eventuality that could disrupt your income. Natural disasters such as hurricanes, floods, earthquakes, and fires can cause direct damage to your property, which prevents you from continuing to generate income through vacation rentals. In this blog, we will explore Loss of Rental Income Coverage in property insurance and how it can safeguard your income during challenging times.

What is Loss of Rental Income Coverage?

Loss of Rental Income Coverage is a crucial component of your property insurance policy if you use your house or condominium for vacation rentals. This coverage is designed to help you maintain financial stability in the event that your property sustains direct damage that renders it uninhabitable, thus interrupting your rental income.

What Damages Does Loss of Rental Income Coverage Cover?

Direct damages caused by events such as hurricanes, floods, earthquakes, and fires are typically covered by this policy. But what if you own a condominium, and the damage occurs in the common areas of the building, such as the pool, tennis courts, or gardens? If these amenities are damaged, your renter is likely to cancel their reservation causing you financial loss. You are also protected in this scenario, even if the condominium you own is not damaged.

Coverage Period and Deductibles

Loss of Rental Income coverage generally has a predetermined coverage amount and covers a period that can range from one month to three or even six months. This provides you with a financial cushion while necessary repairs are made to your property to get it back up and running.

Most homeowner's policies do not have a deductible for this coverage. However, in some policies, a waiting period may be established after the occurrence of direct damage. Be sure to review the details of your policy with your insurance agent to fully understand how deductibles work in your policy. This is one example of why having an insurance broker that is an expert in this field of insurance to provide advice is so important.

Essential Documentation

To make the most of Loss of Rental Income coverage, it is essential to maintain accurate records, including:

  • • Records of reservations made by your guests.
  • • Documentation of payments received from tenants.
  • • Detailed information about income generated from rentals in the same period of the previous year.
  • • Pending reservations for the dates when the property damage occurred and for the subsequent days.

If this is your first year of rentals, you will need to provide evidence of reservations and payments for the current year. This documentation will be crucial when filing a claim with your insurance company and determining the amount of lost rental income you can recover.

Real-Life Examples

To better understand how Loss of Rental Income coverage works in practice, here are some real-life examples:

Example 1: An owner of a condominium in a coastal area experiences damage to the building's common areas due to a severe hurricane. As a result, guests who had reserved their units cannot access the facilities. Thanks to Loss of Rental Income coverage, the owner receives compensation for the lost income during the repair period.

Example 2: An owner of a vacation home in a region prone to wildfires sees their property damaged by a forest fire. Despite having confirmed reservations for the upcoming weeks, they cannot rent out the property due to the damage. Loss of Rental Income coverage allows them to receive compensation to offset the lost income during the repair period.

Tips for Choosing the Best Coverage

When selecting a property insurance policy that includes Loss of Rental Income coverage, consider the following tips:

  • 1. Assess your specific needs and budget.
  • 2. Compare policies with your Novamar executive from different insurance companies to secure the best coverage solution.
  • 3. Consult with your Novamar executive to fully understand the coverage details and exclusions.
  • 4. Keep accurate and up-to-date records to streamline the claims process in the event of a loss.


Loss of Rental Income coverage in property insurance in Mexico is an invaluable tool for property owners and tenants who rely on rental income. It provides you with the peace of mind that, in the event of property damage, you can maintain your financial stability and move forward. Always remember to maintain detailed records and be prepared for any contingency. If you have any questions or need more information, do not hesitate to contact an insurance agent experienced in this coverage. Protecting your income is an investment worth making.

Contact us, and we will gladly analyze your current property exposures and coverages . We will discuss adjustments to your policy to ensure you have the peace of mind of having Loss of Rental Income coverage in case your property sustains damage that could disrupt your income.

México Insurance

México - 322-297-6440
USA / CANADA - 949-274-4111