Landlord insurance claim doubts not assisting COVID-19 eviction avoidance

Landlord insurance during the current rental crisis during the pandemic has emerged as complicated.

Agents and landlords have rejected rent decreases by saying it could invalidate the agent’s insurance policy.

It is the case but not for every policy.

Most policies do require proof of eviction or intention to re-let a home to claim for loss of rent, which some landlords might be considering if their tenants can’t pay.

Most insurers have stopped issuing new products until they receive certainty about evictions and non-payment of rent for tenants in hardship.

Existing policies will continue to be honoured, but landlords will need to find out if their insurer has waived the need to evict or show intention to re-let to claim for loss of rent.

IAG insurers NRMA, CGU, WFI, SGIO and SGIC have waived this requirement, Domain reported.

Suburbanite CEO Anna Porter, acknowledges insurance was a "grey area." 

"Many are relying on landlord insurance to cover the lost rent if their tenant applies for a payment pause but every policy is different.
 
“I urge you to absolutely speak with your insurance broker or insurance company directly and refer to your PDS,” she says.
 
“On the ground, we’re seeing that many policies state a claim will only be paid if the tenant is evicted or terminated by the tribunal or they leave without notice and default on payments after vacating with no warning.”
 
Generally, landlords will also need to be in a fixed lease period and follow the correct processes to be successful in a claim of this nature.
 
“Like me, you’re probably thinking that the current COVID-19 economy doesn’t allow for eviction,” says Porter.
 
“This issue is that if tenants can’t be evicted for falling into arrears then many landlords won’t be able to lean on the rental default provisions in their policies, assuming they even have a rental default in the policy.”