EBM Insurance FAQs: COVID-19 and the impact on landlord insurance
EBM Insurance have provided the below information in regards to how their RentCover policy will respond to Coronavirus relates claims.
These distressing and unusual times bring unforeseen difficulties. And unfortunately landlords and property managers will not walk away unscathed from this global pandemic. The Coronavirus outbreak will undoubtedly impact some tenants and their ability to pay rent. And it may, for a period of time, influence the way property managers inspect rental properties.
…most noteworthy, the situation may determine whether or not investors can continue to pay mortgages.
During this time, a lot of you will look to landlord insurance to recoup costs and cover losses. But will the rental property be protected? We answer this question (and others) as honestly and transparently as we can, to help you better understand how an EBM RentCover policy will respond during these times.
Can we rely on landlord insurance to protect rental properties during times of pandemic?
It is business as usual for your landlord insurance policy. Pandemics do not alter any of the existing terms and conditions in your landlord insurance policy. In fact, all losses are treated with the usual care and consideration offered by EBM RentCover team members. If you need to make a claim for fire damage – we will review it and the policy will respond. Or, if you need to make a claim because your tenant is two months behind in rent – we will again review it and the policy will respond. Rest assured, just because we are in the middle of a global pandemic, an insurance policy will still cover what it is designed to cover.
Landlord insurance policies are black and white. And all are governed by a Product Disclosure Statement (PDS) which outlines exactly what is and isn’t covered – if you have a policy with EBM RentCover, you can find the PDS here.
How is landlord insurance impacted if there is a ban on rental property inspections due to the risk on personal health and safety?
If inspections can’t be done during this period, it won’t make any difference to the outcome of a claim. There is a clause in practically all landlord insurance policies that relates to maintaining the premises and working to prevent future damage or loss. Failure to do so can oftentimes mean a claim won’t be paid. Ongoing property inspections help to make sure you are abiding by the policy terms and conditions. However, we understand these are tyring times and the change in the way rental properties are managed will not impact the cover.
If my tenant loses their job due to the economic outlook (which stems from the Coronavirus) and stops paying rent, will I be able to recoup costs through my insurance?
This would be treated as any other loss of rent claim and would be covered up to six weeks under rent default (as long as it meets the usual T&Cs of the policy). In this situation, the tenant has lost their job as a result of the economic impact of the Coronavirus. However, the reason for not paying rent is because they have lost their job. Therefore, the policy would respond.
If my tenant gets Coronavirus and can’t work or pay rent, am I covered?
If a tenant tests positive for Coronavirus, is unable to work for a period of weeks, and falls behind in rental payments, the losses are unlikely to be covered under EBM RentCover policies. However, remember that the amount of weeks they are likely to be unable to pay rent is low. According to the World Health Organisation, people with mild illness recover in about two weeks, or six weeks in more severe cases. That is two weeks (or a maximum of six weeks) of lost rent which the tenant may be able to catch up on with encouragement and support from the landlord or property manager.
What happens if my tenant gets caught overseas, or has to self-isolate, and during this time does not want to pay rent? Is this covered?
This is a question we cannot answer without more information. We would need to look at the claim as a whole, take the personal circumstances into consideration and determine the reason for the loss. So, if you are faced with this conundrum and need to make a claim, please contact firstname.lastname@example.org.
Will the policy offer cleaning/decontamination cover following my tenant having Coronavirus and having to isolate in a rental property?
Bluntly – the answer is no. EBM RentCover policies do not cover cleaning costs in any situation. It is the tenant’s responsibility to make sure the property is left in the state it was first occupied. If the landlord or property manager has an issue with the cleanliness of a property, they may be able to use the bond to cover costs.
It appears the Coronavirus may impact the need for rental properties. If my tenant is soon to move out and then I can’t secure another tenant because there is little demand for apartments, will losses be covered?
Like a lot of landlord insurance policies, EBM RentCover does not offer protection for changed market conditions when a property is vacant between tenancies. Also, the policy does not cover empty properties that cannot be rented – so, if you are unable to hold house inspections, and therefore unable to secure a tenant, the losses are unlikely to be covered.
What if we lose contact with our tenant (who told us they were going back to China or Europe) and there has been rent arrears – do we need to go to our tribunal to request possession of the property? And then when will insurance step in?
All laws, regulations and processes must be followed during these times. So, if you are unable to reach your tenant, you still need to follow the appropriate steps to gain possession of the property. The good news is, this sort of loss would be covered, in line with the T&Cs noted in the policy, as a normal loss of rent situation.