Insurance Coverage Q&A: What is Held for Rental?

I am a North Carolina subscriber with a question regarding Fair Rental Value. Our insured owns a single family dwelling insured under an HO 00 03 05 11. In December of 2023 he moved from the home to reside in a newly purchased dwelling . He contacted a management company and asked it to hold the dwelling our for rent. He also placed an ad on-line to rent the dwelling. In mid-January of 2024 the management company entered the dwelling to show it to a prospective tenant and found a burst pipe. The damage rendered the dwelling unfit to live in. The insured filed a claim for damage to the dwelling. The insurer accepted the claim and the insured and insurer reached agreement on the scope and cost. We submitted a claim for loss of rent. The insurer denied the claim stating the following: