If a dwelling is declared unfit for occupancy, which coverage applies?

When a dwelling is declared unfit for occupancy, the relevant coverage that applies is typically for lost rental income, often referred to as rental value coverage. This is because the declaration of unfitness generally means that the property cannot be occupied, leading to a loss of income for the owner if the dwelling is a rental property.

Rental value coverage helps compensate the property owner for the income they would have earned from tenants during the period in which the property cannot be occupied due to safety or health concerns. It protects the financial interests of the owner by covering the loss of rental income until the dwelling is deemed fit for occupancy again.

In contrast, building coverage would primarily address physical damages to the structure rather than income loss. Additional dwelling insurance typically pertains to the coverage of other structures or additional policies that enhance protection, which would not directly apply in this scenario of unoccupancy related to rental loss. Lastly, if the coverage limits are maxed, it would imply no coverage is available beyond the specified limits, but this does not address the initial concern of lost income due to the unfit status of the dwelling.