Is 'Fair Rental Value' coverage worth the extra premium for Louisiana landlords?
Is FRV Coverage Worth It for Louisiana Landlords?
When a property becomes uninhabitable, your tenants move out. The rent checks stop immediately. However, your financial obligations—the mortgage, property taxes, and insurance premiums—do not. They keep coming like clockwork.
This brings us to the critical question every Louisiana investor faces: Is Fair Rental Value (FRV) coverage worth the additional premium?
For the vast majority of Louisiana landlords, Fair Rental Value (FRV) coverage is absolutely worth the extra premium.
In a state where post-storm labor shortages can extend rebuilds to 6–12 months, FRV acts as a critical "mortgage safety net". It replaces your lost rental income while the property is uninhabitable, preventing you from paying the mortgage out of pocket on a vacant home.
To put it simply, if your rental income is required to service the property's debt, or if your personal savings cannot absorb a loss of 12 months of cash flow (often exceeding $15,000 - $20,000), FRV is not a luxury—it is a non-negotiable component of a solvent business plan.
What Exactly is Fair Rental Value (FRV)?
To make an informed decision, you need to understand exactly what you are buying. In the insurance world, clarity is king.
"Loss of Use" for Landlords
If you have a standard homeowner’s policy (HO3) for your primary residence, you are likely familiar with "Additional Living Expenses" (ALE). If a tree falls on your house, ALE pays for your hotel and meals while you are displaced.
Fair Rental Value is essentially the landlord’s version of ALE. It isn't designed to pay for your housing; it is designed to replace the business income you lose when a tenant is forced to move out due to a covered peril, such as wind, hail, fire, or lightning.
Our expert tip: It is important to note how this payout is calculated. Your insurance carrier does not guess what your home is worth; fair rental is determined by the lease. If you are renting a unit for $1,800 a month and you have a signed lease to prove it, that is the baseline for your claim. This makes keeping accurate, up-to-date lease agreements vital for every landlord.
The Louisiana Timeline: Why FRV is Different Here
This is where the geography of your investment matters.
If you were a landlord in Ohio or Kansas, skipping FRV might be a calculated risk you could afford. In those markets, if a kitchen catches fire, a local contractor might be available to start work next week.
Louisiana operates on a different clock, specifically the "Hurricane Clock."
When a major storm makes landfall, it damages every house in the parish, not just one. Suddenly, thousands of property owners are competing for the same limited pool of roofers, electricians, and drywall installers.
After Hurricane Ida in 2021, we saw a reality that many new landlords weren't prepared for. Many landlords waited 6+ months just to get a roofer on-site.
During months of waiting, the property sat uninhabitable. If those landlords did not have FRV, they were paying the mortgage out of pocket for half a year or more. For many of our clients, FRV was the only thing that kept them from defaulting. In a disaster scenario, cash flow is just as important as the physical repairs.
The Cost of a "Gap" in Coverage
When evaluating insurance, it helps to look at the hard numbers. Is the "saving" of skipping this coverage actually a saving? Or is it a liability in disguise?
Based on current market estimates for DP3 policies in Louisiana, here is the comparison between carrying FRV and self-insuring your loss of rent.
The math is straightforward. For a cost of roughly $12 to $15 a month, you are insuring a potential loss of $15,000 to $25,000. In terms of risk management, this is one of the most efficient coverages available in the insurance market.
3 Scenarios Where FRV is a "Must-Have"
While we recommend this coverage for almost everyone, there are three specific profiles of landlords for whom skipping FRV is financially dangerous. If you fall into one of these categories, you should consider this coverage mandatory.
Scenario 1: You Have a Mortgage on the Property
If your business model relies on the tenant's rent to pay the bank's note, you cannot afford to be without FRV. It is that simple.
Real estate is a leverage game, but leverage cuts both ways. A six-month vacancy during a rebuild is easily a $10,000+ loss for many local owners. Most small investors do not have that kind of liquidity sitting in a reserve account. Without FRV, a natural disaster becomes a financial crisis that could force you to sell the asset at a loss just to stop the bleeding.
Scenario 2: The Property is Your Primary Income
We work with many retired "mom-and-pop" landlords. For these clients, the rental portfolio isn't just "extra money"; it is their pension. They rely on those rental checks for their daily living expenses, groceries, and utility bills.
If you are in this category, you need coverage that protects your lifestyle, not just the building. FRV ensures that your personal standard of living doesn't plummet just because your rental property took wind damage.
Scenario 3: The Property is in a High-Risk Hurricane Zone
In Louisiana, "high risk" covers a lot of ground. However, certain parishes are historically more prone to catastrophic wind events and the resulting labor shortages that extend rebuild times.
If your property is located in Terrebonne, Plaquemines, Lafourche, Jefferson, Orleans, St. Mary, or St. Tammany Parish, the likelihood of a named storm disrupting your business is significantly higher.
These areas frequently see the longest delays in contractor availability, meaning your reliance on Loss of Use coverage will be longer and more critical than in northern parts of the state.
What FRV Does NOT Cover (Managing Expectations)
As your independent agent, our job isn't just to sell you a policy; it's to make sure you understand how it works so there are no surprises when you file a claim. Fair Rental Value is powerful, but it is not a "cure-all" for every vacancy issue.
There are critical distinctions regarding what triggers this coverage.
1. Tenant Evictions and Non-Payment
FRV is property insurance, not "bad tenant insurance." It does not pay you if a tenant simply stops paying rent, breaks their lease, or has to be evicted. Those are management risks, not physical damage risks.
2. General Vacancy
It does not pay for the downtime between tenants. If your tenant moves out and it takes you two months to find a new one, that loss of income is on you. FRV only kicks in when the property is uninhabitable due to a covered peril.
3. The "Covered Peril" Rule: The Flood Warning
This is the most common misconception we see in Louisiana. The peril causing the damage must be covered by the policy for FRV to apply.
If your rental property floods during a storm, your standard Landlord (DP3) policy will generally deny the claim because flood damage is excluded. Consequently, the Loss of Rent associated with that flood is also excluded.
You might ask, "What about my flood policy?" Unfortunately, most standard flood policies (NFIP) cover the building and contents, but they do not cover loss of rent.
Is there a solution?
Some private flood carriers do offer Loss of Rent as an endorsement, but in certain high-risk areas, the cost for this can be very high. It is vital to discuss this distinction with us so you know exactly which disasters protect your income and which do not.
Why an Independent Agent is Your Best Bet for DP3
Landlord insurance in Louisiana is a moving target, with carriers frequently changing risk appetites or imposing moratoriums. Unlike "captive" agents limited to a single brand, TWFG Landeche is an independent agency. We don't work for a single insurance carrier; we work for you. We shop the entire Louisiana market to find the carriers that are currently friendly to landlords. We compare rates, coverage limits, and specifically, how they handle Fair Rental Value.
Is Your Rental Income Truly Protected?
Don't wait for the next named storm to discover a coverage gap. If you rely on rent to pay the mortgage, you must ensure your cash is insured against the 6-to-12-month rebuilds common in our state. We specialize in protecting Louisiana landlord portfolios by calculating your specific "vacancy risk" and finding competitive rates.
Contact TWFG Landeche today for a full review to keep your investment profitable.
Hi, I’m Ronnie — founder of Landeche Insurance. I’m a lifelong Louisiana resident who believes insurance should be honest, local & easy to understand.
Protecting Louisiana families & property for 20+ years. Experts in homeowners, flood, auto, landlord, life & classic car insurance (& more) — with clear advice & coverage that fits you. Based in Louisiana. Real help from real people. 👉 Call 504-228-7184.
Get a flood insurance quote.
Get a homeowner’s insurance quote.
Get a life insurance quote.
