Dwelling Policy (DP)Question 317 of 531
A rented dwelling is unlivable for three months after a covered fire. The rent was $1,800 a month, and $200 a month of expenses stop while it is empty. Fair rental value pays:
a.$4,500
b.$4,800
c.$6,000
d.$5,400
Explanation
Fair rental value pays the rent the dwelling would have earned less the expenses that do not continue while it stands empty: $1,800 minus $200 is $1,600 a month, and three months of that is $4,800. Paying the full $5,400 ignores the saved expenses and hands the owner more than the actual loss. The coverage runs for the time reasonably required to repair.
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