We asked General Insurance Broker, Vinny Byrne from KHV Insurance Solutions to provide some clarity about whether Landlord Insurance might provide cover during this difficult and confusing time.
“While of course different insurance providers may have different policies, the general principle is that landlords insurance does not cover market vacancy, however it often covers the landlord when a tenant breaks any agreement or obligations such as breaking a lease without notice, or causing damage and any resultant vacancy etc.” said Vinny.
“The most likely scenario is if the tenant just stops paying rent, so is in default, you may be able to claim on Landlord Insurance.” Vinny said “I have just spoken with insurer AIG and with the new Government ruling the landlord CAN claim the rent default and also ALLOW the tenant to stay in the dwelling which is great news for current policy holders although again we must stress that this isn’t an automatic inclusion and everyone should check their PDS.”
“The insurers I deal with do offer cover for Rent Default although on most policies this isn’t an automatic inclusion and has to be selected so this information may not apply to clients who have not opted for this cover or were not told about it.” said Vinny.
Below is the extract from the AIG wording.
When an insurer will pay for Rent Default
An insurer will pay if your Tenant:
- Leaves your Buildings before the end of the tenancy period stated in the Rental Agreement and does not give you or your agent notice, or
- Stops paying Rent owed to you or your agent, or
- Is legally evicted from your Buildings.
They will pay the weekly amount your Buildings are Rented for. The most they will pay is $12,000. They will not pay you when your Buildings are re-Tenanted.
They will also provide cover for up to six weeks Rent after:
- A death of a sole Tenant that occurs before the end of the tenancy period of your Rental agreement or during a periodic tenancy agreement. Cover will start from the date of the death of the sole Tenant. We will not pay if the sole Tenant had given you or your agent notice in accordance with the Rental agreement or periodic tenancy agreement prior to their death.
- Your Rental agreement or periodic tenancy agreement is legally terminated by a Residential Tenancies Tribunal or another relevant authority on the grounds of hardship on the part of the Tenant. Cover will start from when the termination order issued by the Residential tenancies Tribunal or other relevant authority takes effect.
This cover will stop immediately if your Rental property is re-Tenanted.
If anyone has any further questions, Vinny would be only too happy to assist. You can email Vinny at firstname.lastname@example.org or phone 0429 336 964.