In Vermont Mut. Ins. Co. v. Petit the United States District Court for the District of Massachusetts decided how to determine fair rental value of units after a fire.
The insurer, Vermont Mutual, argued that the rental value should be based on the rent collected in the two calendar years before the fire. The insureds based their computaton on the rental contracts in effect at the time of the fire.
The court agreed with the insureds, stating that theirs is the best evidence of the "fair market value," which is "the highest price which a hypothetical willing buyer would pay to a hypothetical willing seller in an assumed free and open market."