Which type of insurance is designed to protect against rental income loss?

The type of insurance designed to protect against rental income loss is indeed fair rental value coverage. This coverage is specifically intended for property owners who rent out their property and may suffer a loss of rental income if the property becomes uninhabitable due to a covered peril, such as a fire or severe storm damage.

When a rental property is damaged and cannot be leased, fair rental value coverage compensates the owner for the income that would have been generated during the time the property is being repaired. This is crucial for landlords, as it helps mitigate the financial impact of losing rental income while also enabling them to cover ongoing expenses like the mortgage and property taxes.

Other options do not directly address the specific concern of lost rental income. For example, loss of use coverage generally refers to a tenant's inability to live in their rented premises due to such damage but does not cover the landlord’s lost income. Property damage coverage focuses on the physical damage to the property itself, and personal liability coverage pertains to legal liabilities arising from injuries sustained on the property, rather than loss of rental income.