Is this the same as business income?

It is business income for a property owner, and the terminology differs by form. On a commercial policy it is usually written as business income including rental value; on a dwelling fire policy it appears as fair rental value. The mechanism is identical — income lost during the period of restoration after a covered loss — and the common defect is identical too, which is a limit set from a rough guess rather than from the rent roll.

What is extended period of indemnity?

An extension that continues the cover after the building is repaired, while you re-let it. Without it, cover stops the day the property is habitable — which assumes tenants are waiting at the door. In reality a commercial unit can take months to re-let after a long closure, and that gap is entirely uninsured unless you buy the extension. It is inexpensive and routinely omitted.

Does it pay if the tenant simply stops paying?

No. This responds only to loss of rent caused by physical damage from a covered peril. A tenant defaulting, going out of business or disputing the lease is a credit and legal problem, not an insured one — and there is no ordinary commercial product that fills it. Landlords occasionally assume rent cover is a rent guarantee; it is not, and the distinction is worth being clear about before it comes up.

What is fair rental value coverage, and how much do I need?

It is business income cover for a landlord: the rent that stops arriving while the property cannot be occupied after a covered loss. The two things owners get wrong are the amount and the period. The amount should be gross rent less any expenses that genuinely stop — not net profit — and the period has to reflect how long a rebuild actually takes, including permits and code upgrades, which on a serious loss is far longer than the twelve months most policies default to.

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The detail

Fair rental value and business income cover are limited by a period of restoration, which runs until the property should reasonably be repaired — a period that can extend well beyond a standard twelve-month limit on a major loss.
International Risk Management Institute

What this means for you

Set the limit on GROSS rent less only the expenses that actually cease. Rates, insurance and debt service do not stop because the building is empty.
Twelve months is usually too short on a serious loss. Permitting, code upgrades and contractor availability routinely push a rebuild past a year.
Include a lease-up period if you can. Rent does not resume the day the building is finished — it resumes when tenants return.
Check for a coinsurance clause on this cover too. It works the same way against your projected annual rent and is missed far more often than the building one.

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