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13 August 2020

Covid-19 and your landlord insurance policy

We have received a number of questions about what Covid-19 and alert level restrictions mean for landlord insurance policies. This advisory aims to answer the most commonly asked questions.

Property inspections

Landlords and property managers carry out property inspections to identify maintenance issues, and to meet conditions of the landlord's insurance policy, which stipulates inspections are completed within specified timeframes or claims may be declined.

In addition, if your policy extends to cover loss of rent, should your tenant fall behind with payments there will be a requirement to visit the property within a set amount of days to confirm the premises are still occupied. Failure to do so in the time frame provided may impact cover. 

As the frequency requirement for inspections varies between insurers it is important to check policy wordings.

When the Covid-19 alert level is high enough to prevent inspections, insurers will be unable to enforce policy conditions and will have to take a pragmatic approach for claims occurring in this period.

Landlords will also need to postpone (rather than cancel) inspections during this time, but keep records of any communication with the tenant regarding the postponement.

At alert level 2 means inspections can be carried out. Delayed inspections that fell due during earlier lockdown periods must then be carried out as soon as reasonably practicable. 

Landlords will need to ensure they adhere to recommendations and restrictions outlined by government at www.tenancy.govt.nz

Rent protection and loss of rent.

This type of cover is an optional additional benefit for purchase, and not automatically included under most landlord policies.

Cover provided can include cover for lost rental income:

  • If the tenant vacates the property without giving the required notice
  • If the tenant is evicted due to non-payment of rent.

Both should be claimable events as a result of Covid-19.

The current financial climate may see landlords with:

  • reduced rents due to their tenant’s reduction in income or loss of employment
  • loss of rent as prospective tenants cannot be shown through properties to rent
  • some landlords may agree to release tenants from their tenancy agreement, or to reduce rent.

These scenarios will not trigger rental protection/loss of rent cover.

Loss of rent due to an insured peril e.g. fire

Loss of rent cover still applies as long as there is physical loss or damage to the property.

We’re here to help

One of our responsibilities as a broker is to ensure you have all the information you need to make informed decisions about the risks you and your business face. With the effects of coronavirus being felt in a number of ways by our clients across the country, we wanted to share advice to help during this difficult and unprecedented time. If you have any questions or would like to speak to us about about landlord insurance please talk to your broker.

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