When a major fire damages an apartment building, what type of loss is the owner experiencing if they lose rental income for four months?

The owner of the apartment building experiencing a loss of rental income for four months due to a major fire is encountering a business interruption loss. This type of loss specifically refers to the financial impact an insured event has on the revenue-generating ability of a business or property.

In the context of the apartment building, while the direct physical damage to the structure is a significant concern, the inability to derive rental income during the period of repair and recovery constitutes a business interruption. The loss of income is a secondary effect, stemming from the primary damage caused by the fire, and it emphasizes the importance of having proper coverage for income that can be lost while the property is not habitable or rental-ready.

This concept is crucial in the insurance field because owners must ensure they have adequate business interruption insurance to protect against such losses, allowing them to recover the lost income while the property is being repaired.