Covid-19 Update: Landlord Insurance
Friday, May 29, 2020
During the Covid-19 pandemic we have been closely monitoring information provided by REINSW (The Real Estate Institute of NSW) who have been keeping us up to date an all the pandemic-related changes in the property industry. Not an easy task in the constantly changing environment we are experiencing right now.
One of the issues that REINSW have been monitoring closely are the public statements from landlord insurance companies and they have been interpreting those comments with respect to insurance claims in the current environment.
They have advised us that landlord insurance company Terri Scheer has advised that it will not be responding to claims for loss of rent as a consequence of a negotiated rent reduction. Terri Scheer joins the ranks of other landlord insurance companies who have taken a similar position. Terri Scheer have also stated that they will not be taking on any new clients during the pandemic.
What this means for our Landlords
If a landlord agrees to a reduction in the rent for their tenant, then they may not be able to make an insurance claim for that loss of rent. BUT if the Tribunal IMPOSES a rent reduction on the landlord then they should be able to make a successful claim – however, each policy is different so check with your insurer first.
Insurance will only cover what the tenant is legally responsible for. If negotiations take place and the landlord agrees to a reduction, the tenant is then only responsible for the reduced rent. If they then default the insurance would respond by paying the rent that the tenant is legally responsible for. The insurer also only has a right of recovery over the reduced rent as well.
For more information on this news click here.
In light of this information, we would urge any of our landlords who are concerned to contact their insurance company for clarification of their policy in this situation, particularly if you are considering negotiating a reduced rent with your tenant. Our Property Management Team are happy to discuss any concerns you may have any time, just give them a call.
