Rent default, sometimes called tenant default, protects you if your tenant stops paying the rent and is in breach of a tenancy agreement. For example, if your tenant's income is stopped or reduced due to an unforeseen event such as losing their job or becoming ill, rent default can pay you a rental income. It can also cover associated legal expenses.
Loss of rent, on the other hand, can pay you a rental income if your property becomes uninhabitable because of an insured event, like a fire, storm or rainwater damage. You will only be covered for the period you were unable to charge rent because the tenant was unable to live in your property. The insurance provider will usually decide if your property is uninhabitable.
Typically, insurers will cover you for loss of rent if your rental becomes uninhabitable – for example, due to a bushfire or serious storm. However, most insurers will not automatically cover you for rental or tenant default (e.g. if a tenant stops paying you rent). Instead, you will need to add this option on to your policy. In the current cost of living crisis, there's a risk tenants may be unable to pay rent, so it's definitely worth considering.
Gary Ross Hunter
Insurance and innovations editor
Remember, rent default cover is also called tenant default.
Rent default can pay you a rental income if your tenant stops paying rent or leaves without giving notice while there's a rental agreement in place.
To be covered, you and the tenant must have a signed written lease agreement that has been in place for a number of weeks (often around 4) before the loss occurs. You can't get rent default cover for casual lets.
In most cases, there will be a cap on how long you can receive rental payments. For example, Budget Direct, CHU, Youi and QBE will pay your rent for up to 15 weeks.
You may also need to pay an additional excess (a payment towards the cost of a claim, often in the region of $400). The amount should be outlined to you by your insurer when you take out cover.
We looked at all the landlord insurers available on Finder to see who offers rent default insurance.
| Brand | Included | Receive rent default for |
|---|---|---|
| Budget Direct | Optional add-on | Up to 15 weeks |
| Youi | Optional add-on | Up to 15 weeks |
| QBE | Optional add-on | $15,000 or up to 15 weeks |
| Qantas | Optional add-on | Up to 15 weeks |
| Australian Seniors | Optional add-on | The lesser of up to 6 weeks of rent or $2,500 |
Rent default isn't usually automatically covered by landlord insurers, so you'll need to pay a little extra if you want it included. It's the same situation with loss of rent. If you rely on your rental income in any way, for example to pay bills or for other living expenses, then it's probably worth getting. You can compare more landlord insurance policies here.
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