Of course cash flow is king in the world of real estate investing. Buying and holding property for the long haul provides both a long term benefit in appreciation as well as a positive monthly income each month.

By setting your rental rate in line with therent loss coverage for your rental market rent enough to cover not just the principal and interest payments but taking care of property taxes, insurance and maintenance costs, you’ll be taking out more than you’re putting in.

But what happens during a catastrophe? What happens if there’s a fire or lightning damaged the roof and causes the unit to be temporarily uninhabitable. If your tenants have to find other shelter, how do you make up for the lost revenue?

There are just a few answers to that question with the initial response perhaps to increase the rent and recover the lost income over time but that’s not very appealing nor will you likely to be able to get away with any substantial rental hike. But you can take out rent-loss coverage provided by your insurance agent. What is rent-loss insurance?

First, what it is not is paying you an amount equal to market rent while you’re looking for a tenant. Rent-loss coverage doesn’t include vacancies. What rent-loss does take care of is paying you monthly income equal to your rental agreement while your property is being repaired.

Say that a fire breaks out in the living room and causes extensive damage. Your insurance coverage will pay for the materials and labor to repair and replace whatever is needed and an additional rent-loss coverage rider will also pay out amounts to cover your lost rent. With both types of coverage, your property will be rehabilitated and you won’t feel the sudden pinch of making an extra mortgage payment.

Rent-loss coverage is often required by banks when financing investment property but don’t assume you already have it. When you speak with your insurance agent, make sure you’ve covered not only against hazards and liabilities but rent-loss as well should you ever need it.