Coronavirus: Can landlord insurance help?
Unfortunately, if your tenant can't pay rent due to the coronavirus, it's unlikely you'll be able to claim on landlord insurance.
On 29 March, the government announced a temporary ban on evictions, in an effort to help thousands of Aussies who have lost their jobs due to the coronavirus. But what does this mean for landlords who rely on their tenants for income?
In this article, we'll explain how landlord insurance is likely to work in this situation, whether you can still get coverage, and how the Australian government is helping out landlords.
Is it too late to take out landlord insurance?
Many insurers have stopped selling landlord insurance altogether. Those that do still sell landlord cover may have stopped offering loss of rent or tenant default cover options. It is important to note that having landlord insurance does not mean you are automatically covered if your tenant cannot pay their rent.
If you have existing cover with these options you should be aware that the temporary freeze of rental evictions announced by the federal government could impact your ability to claim. The table below shows which insurers still offer new landlord insurance policies as well as tenant protection options.
|Provider||Are they still offering landlord insurance?||Are they offering tenant default options?||Apply|
Can I claim if my tenant has left the property?
If you have rental default insurance, you should be able to claim if your tenant has suddenly left their property without giving you proper notice.
For example, your tenant may have been an overseas visitor, who left suddenly because they wanted to be closer to home during the coronavirus pandemic. In this situation, it's likely you will be able to claim if you have rental default cover.
Can I make a claim if my tenant can't pay rent?
If your tenant has lost their job due to coronavirus, and can't pay rent, you should contact your insurance company as soon as possible to see if your policy can help.
As this is an unprecedented situation, insurers may handle claims on a case-by-case basis. However, we analysed the PDSs of four key insurers, to see how their rental default insurance might react in this situation.
|Insurer||What the PDS says||Our interpretation|
|Youi||A rental default is where your lessee occupies the premises without paying the agreed rental payments which leads to the termination of the lease either by a termination notice from your rental agent/property manager or court order.||You must terminate the lease before you can claim on your landlord policy. As evictions are currently banned, this isn't possible for reasons of financial hardship, so you might not be able to make a claim.|
However, we've contacted Youi for clarification and are currently waiting for confirmation. In the mean time, it would be best to reach out to Youii for specific advice on your policy.
|Westpac||You're covered for loss of rent if your tenant leaves your building before the end of the rental period and does not give the required notice, does not pay rent owing and leaves your building without giving the required notice, or is legally evicted from your building.||A Westpac representative confirmed that the tenant would have to leave your property before you can claim for rental default.|
Unless they have left the property, it's unlikely you'll be able to make a claim.
|St George||You're covered for loss of rent if your tenant leaves your building before the end of the rental period and does not give the required notice, does not pay rent owing and leaves your building without giving the required notice, or is legally evicted from your building.||The tenant has to leave your property before you can claim for rental default. Unless they have left the property, it's unlikely you'll be able to make a claim.|
St George policies are provided by Westpac.
|Coles||A breach notice for non-payment of rent or a notice of termination for non-payment of rent must be issued as soon as practical when the rent is in arrears to the tenant by you or your rental agent||You have to submit a termination notice before your claim would be successful.|
However, a Coles representative suggested claims may be considered if the landlord could prove lost income.
Will my existing landlord insurance cover claims unrelated to coronavirus?
Yes. While there is some uncertainty around how landlord insurance can help with coronavirus-related claims, you can trust your policy to react as normal with all other issues.
That means, depending on your policy, you'll still be insured for things like fire and storm damage, as well as damage caused by your tenants.
Is there any support for landlords from the government?
At the time of writing, the government hasn't announced any support specifically targeted at landlords. However, new stimulus packages are being announced regularly, so don't give up - things might change in future.
Remember, support has been announced for renters, which should also ease the burden on landlords. Aussies who have found themselves unemployed as a result of coronavirus may be able to claim JobSeeker benefits, while employees who have had their hours cut may be eligible for JobKeeper benefits.
The benefits are designed to help people keep up with their day-to-day expenses, including paying rent.
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