Landlords: Am I covered for Loss of Rent?

The impact of COVID-19  on the Australian economy may mean that many people will struggle to pay their bills. As a result many of our domestic landlords insurance policy clients are wondering if the ‘rent default’ option in their insurance policy will cover them for loss of rent if their tenant is unable to pay.

At the moment each insurer is taking a different approach and coverage will depend upon which insurer your policy is held with. The below information provides a summary of where the various insurers stand as at 27/03/2020.

CGU

Yes, if you have included ‘rent default’ then your policy will respond as per the policy wording. However the bond MUST be used up first and the landlord must take all reasonable steps to obtain the rent. Please note that as of 26/3/20 there is no longer an option to include rent default on all new policies and it cannot be added to existing policies.

Allianz

As at 31/03/2020 all renewals up  to 25/4/2020 where the policy has the ‘Rent Default’ and ‘Theft by Tenant’ optional cover taken will be accepted.

Renewal invites after 25/04/2020: any policy which has the ‘Rent Default’ and ‘Theft by Tenant’ optional cover will be invited but without the ‘Rent Default’ and ‘Theft by Tenant’.

‘Rent default’ & ‘theft by tenant’ cannot be added mid term or at renewal or for any new business.

Blue Zebra Insurance

As of 18/5/2020 all new business or endorsements will not be able to have the option of rent default. If an existing policy has rent default the policy will respond with the following amendments:

For policies with accidental damage;

  • Maximum number of weeks covered is reduced from 20 weeks to 10 weeks for most insured events.

  • Introduction of a limit per claim of $10,000 for most insured events.

  • For the hardship insured event, the existing time limit of 6 weeks remains, however there is now a limit per claim of $6,000.

For policies with Listed events:

  • Maximum number of weeks covered is reduced from 12 weeks to 8 weeks for most insured events.

  • Introduction of a limit per claim of $6,000 for most insured events.

  • For the hardship insured event, the existing time limit of 4 weeks remains, however there is now a limit per claim of $3,000.

QBE

No cover.

Vero

Existing policies:

  • All policies will retain the Loss of Rent - Tenant Default option, if it was previously selected.

  • The option can no longer be added to an existing policy.

  • The option to add Loss of Rent -Insured Event cover to existing policies is still available.

Policy renewals:

  • If the Loss of Rent - Tenant Default option has already been added to an existing policy, Vero will continue to offer this cover with your renewal.

  • The option to add Loss of Rent - Tenant Default cover to an existing policy upon renewal, is no longer available.

  • The option to add Loss of Rent - Insured Event cover is still available at renewal.

New policies:

  • The Loss of Rent - Tenant Default option is no longer available for new policies.

  • In the instance where a valid quote for Loss of Rent - Tenant Default cover has been provided prior to 27 March 2020 the cover will be considered.

  • The option to add Loss of Rent - Insured Events cover to new business policies is still available.

Please note this information is accurate as at 27/03/2020 however the situation is still evolving and subject to change.

If you have a landlords insurance policy through AB Phillips and would like further information please don’t hesitate to contact Sandi Hills on 03 8586 9330  or email sandih@abphillips.com.au

Kate Liptrotinsurance