Indemnity Period
The indemnity period is the maximum length of time for which a business income or loss of rents policy will pay claims following a covered loss, typically twelve to twenty-four months.
The indemnity period defines the maximum duration for which the insurer will pay loss of rents or business income claims after a covered property loss. For apartment buildings, the indemnity period begins when the covered event causes units to become uninhabitable and ends when the property is restored to a condition where it can be re-occupied, or when the maximum indemnity period expires, whichever comes first.
Most apartment policies provide an indemnity period of twelve months, which is adequate for many loss scenarios. However, larger or more complex buildings, properties with specialized construction, and buildings in areas where contractor availability is limited may require eighteen to twenty-four months. Restoration timelines have lengthened in recent years due to supply chain disruptions, labor shortages, and permitting delays, making longer indemnity periods more important than in the past.
Some policies also include an extended period of indemnity, which continues payments for a specified number of days (typically 60 to 180) after the physical restoration is complete. This accounts for the time needed to re-market and re-lease units that were vacated during the restoration. Without this extension, the owner faces a gap between completing repairs and generating rental income from newly leased units.