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Insight

COVID-19 & Changes to Landlord Cover

By Lidia Siljanoski on

The property insurance sector is not immune from the economic and health implications of COVID-19. Accordingly, there have been some important changes made by insurance companies when it comes to Landlord insurance cover.

Below we have outlined key changes to be aware of for new quotes and policy amendments.

Landlord Insurance cover

Landlord insurance cover is designed to provide insurance protection for your liability as a landlord, as well as cover for Landlord’s contents, loss of rent by an insured peril, rent default among other benefits.

Click here to read more on Landlord Insurance cover.

New changes imposed on Landlord Insurance cover during the COVID-19 pandemic

In light of the COVID-19 pandemic, many Landlord insurers have placed an immediate embargo on rent default cover and theft by tenant cover. This embargo applies in the following circumstances:

  • New policies placed from 28/3/2020 cannot cover these risks
  • Existing policyholders who are seeking to increase their cover to include rent default, and theft by tenant cover are unable to. Unfortunately these cover features are temporarily unavailable, and Whitbread are unable to endorse your policy to include it for the time being.

This embargo will continue to be in place as insurers monitor the unfolding situation due to COVID-19.

Why has this change been implemented?

Given the devastating number of job losses throughout the Australian economy, and ongoing uncertainty, insurance companies believe the number of “rent default” and “theft by tenant” claims will increase substantially.

Unfortunately many landlords did not opt to insure with this cover until COVID-19 hit, but have since tried to take out the cover mid-term. In essence, this is like trying to take out flood insurance as the water flows in. Insurers are not financially able to cover an event deemed a certainty.  

For insurers, it is not cost viable to pay the number of claims they will likely receive for these events, as they simply could not afford to do so. It would deplete their premium pool and they would likely collapse.

What happens with existing Landlord policies?

All existing policies will remain with Rent Default and Theft by Tenant cover in place, and will still be offered this cover at renewal.

If you have an existing Landlord policy and wish to add Rent Default and Theft by Tenant cover, we will not be able to do so until the embargo is lifted.

What happens for new quotes?

From 28/3/2020 Theft by Tenant and Rent Default cover is not available under Landlord Insurance. Once the embargo is lifted, we will again be able to offer these policy features.

What happens in a claim?

 Existing landlord policies

It is business as usual for existing landlord insurance policies. If you need to make a claim for losses as a result of rent default, tenant theft, or a claim for fire or storm damage, we will assist as normal, managing the claim and seeking the best possible settlement outcome.

New landlord insurance policies (after 28/3/2020)

Again, Whitbread’s property insurance claim specialists will manage all Landlord Insurance claims. The only circumstance where this will differ, is if you are seeking to claim for Rent Default, or Theft by Tenant. If there is no cover under the policy, we are unlikely to be successful in lodging a claim with the insurer.

Insurers have still assured us that claims are treated on their own merits. Based on this, we still encourage you to lodge claims for review in the event you have experienced rent default losses as a result of the COVID-19 pandemic.

Does the policy cover cleaning/decontamination costs if my tenant falls ill with COVID-19 and is self-isolating in my rental property?

No, cleaning costs are not generally covered by Landlord Insurance policies. It is the responsibility of your tenant to ensure the property is in a clean and satisfactory condition. If you have an issue with the condition of the property, the bond may be able to cover these costs.

What if my property becomes vacant due to a drop in demand as a result of COVID-19?

Landlord Insurance does not offer coverage as a result of changed market conditions i.e. economic downturn as a result of Coronavirus.

What happens once the pandemic situation passes?

The rent default and theft by tenant cover embargo will continue until such time insurers declare cover can again be provided.

Once available, Whitbread will include these cover features in your Landlords policy where requested.  

 

We sympathise and appreciate this is a challenging time, and will always do our best to support you where we can. For any questions related to your landlord insurance coverage, please don’t hesitate to get in touch with your Whitbread broker:

E info@whitbread.com.au        T 1300 424 627 

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This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice.  Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

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