Loss of rent insurance pays the rent that stops arriving because the property cannot be lived in after an insured event. It is a section of the buildings policy rather than a product of its own, it is usually included as standard, and it is triggered by damage rather than by a tenant. That trigger is the whole distinction that matters.
The trigger is damage, not default
Fire, flood, escape of water, storm or impact makes the property uninhabitable, and the rent stops as a consequence of the damage. The section then pays for the period the property cannot be let, within the limit and period on the schedule. A tenant who simply stops paying triggers nothing here, because the building is fine.
How much and for how long
Usually a percentage of the buildings sum insured, commonly a fifth or a quarter, over a stated period, commonly twelve months. Both are worth converting into real numbers and comparing against the annual rent and against how long a full rebuild would take, because the defaults are set for an average property rather than yours.
Alternative accommodation alongside it
Where the tenancy obliges you to rehouse the tenant, most policies pay for that too, frequently within the same limit. On a property with a long standing tenant and a tenancy that promises rehousing, the two together can consume the limit faster than a landlord expects.
Questions people ask about loss of rent insurance
Is loss of rent included as standard?
Usually, as part of the buildings section, expressed as a percentage of the sum insured over a stated period.
Does it cover a tenant who stops paying?
No. That is rent guarantee, a separate and heavily conditional product.
How long should the period be?
Long enough for a realistic rebuild. Twelve months is the default and frequently too short for a serious fire.