I have an existing Landlord Insurance policy, what does this change mean for me?
There is no change to Landlord policies purchased before 14 June 2020 and on or after 18 April 2021. Coverage and support will continue as currently detailed in the Product Disclosure Statement (PDS).
Every claim lodged under a Landlord policy will be assessed on a case-by-case basis, based on any terms and conditions of the PDS.
Due to the unprecedented circumstances of COVID- 19, landlords are now only required to provide proof of financial loss rather than a tenant eviction notice or intent to re-let when lodging a claim.
Is the process for making a claim still the same?
Yes, the current process for claims is still the same. For one incident, you can only claim rent default under Buildings Insurance or Contents Insurance - you cannot claim under both.
However, due to the unprecedented circumstances of COVID- 19, landlords are now only required to provide proof of financial loss rather than a tenant eviction notice or intent to re-let when lodging a claim.
Does RACV Landlord Insurance Policy cover me for Rent Default during COVID-19, if my tenant loses their job and can’t pay their rent?
You’re entitled to make a claim if your tenant has defaulted on their rental payments, whether this was due to COVID-19 or other events, provided that:
- You have not been previously paid a claim under the same tenancy for:
- rent default
- theft or attempted theft by a tenant or their guest, or
- vandalism or a malicious or intentional act by a tenant or their guest, and;
- your tenant was not behind in rent payments before your policy started.
Is the process for making a COVID-19 Rent Default claim the same? Are there any exclusions/restrictions to claiming?
Yes, the process is the same. However, due to the unprecedented circumstances of COVID-19, you are now only required to provide proof of financial loss rather than a tenant eviction notice or intent to re-let when lodging a claim with RACV Landlord Insurance.
For one incident, you can only claim rent default under Buildings Insurance or Contents Insurance - you can’t claim under both.
What documents do I need to substantiate my claim?
For any Rent Default claims, you’ll need to supply the following documentation:
- written rental agreement that states the term of the rental period and the amount of rent and bond your tenant needs to pay.
- the current Rental Ledger that shows the rental payments made by the tenant so far and when the rental payments stopped, causing the default.
Keep in mind that the PDS states that you are also expected to:
- do everything reasonable to prevent further loss and;
- take all reasonable steps available to relet your property, and/or legally terminate the tenancy and evict your tenant when you become aware your tenant’s behaviour may cause you to make a claim for Rent Default.
In cases where your tenant can no longer pay rent because of COVID-19, it will be accepted that you have not attempted to re-let or evict yet. Instead, you will be asked for evidence of your tenant’s loss of income as a consequence of COVID-19 and that you attest to seek to control losses as much as you can.
If my tenant moves out and I can’t secure another tenant because there’s little demand for rental properties, will my loss of rent be covered?
To an extent. If the tenant vacates the premises before the Lease Agreement end date, Rent Default will be covered until the policy limit has been exhausted or a new tenant is secured, whichever comes first.
Does my policy cover cleaning/decontamination if my tenant tests positive to COVID-19 and self-isolates in my rental property?
No, as this is not a listed event.
If my tenant leaves the property and returns to their home country due to COVID-19, and contact/communication is lost, am I covered for rent default? Do I need to go to the Tribunal and request possession of the property to be covered?
Yes, in this situation, any claim lodged for Rent Default and/or Malicious Damage will be managed as per the normal process and the applicable State-based legislation must be followed.
How much Rent Default can I claim?
The maximum amount for a Rent Default claim is $10,000.
- If the Rent Default limit isn’t exhausted in the first payment and a new tenant hasn’t been secured, you will receive fortnightly payments until the limit has been exhausted or a new tenant is secured, whichever comes first.
- The Landlord/Real Estate Agent must continue to mitigate the loss by actively advertising for a new tenant.
Do I have to pay an excess?
Yes, 4x the weekly rent amount that is shown in your written rental agreement plus the rent default excess of $300.
The applicable excess will not be required to be paid upfront, as it will be deducted from the cash settlement amount due to be paid to you during the claim for your rent default loss.
Example - Deductions from Settlement
- Weekly rent: $1000
- Claimed 9 weeks rent: $9000
- Less 4 weeks rent: $4000
- Less rent default excess: $300
- Claimable amount: $4700
When can I lodge my Rent Default claim due to COVID-19?
As the applicable excess on any Rent Default claim is 4x the weekly rent plus $300 Rent Default excess, the loss of rent suffered must exceed that amount before a claim can be processed/paid, but the claim can be lodged for consideration earlier.