Landlord insurance: what constitutes a rental default in a pandemic?
As each Australian state works out what support and processes are to be put in place for landlords and tenants, the elephant still sits in the corner of the room, waiting to be addressed.
The Insurance Council of Australia website is noticeably quiet to what constitutes a rental default in a pandemic.
The Real Estate Institute of Australia has approached the ICA to obtain clarity on what landlords are best to do, when it comes to claiming for rental defaults versus rental negotiation with a tenant.
"Policies differ on the triggers required for a rental default or loss of rent to be recognised," said REIA president Adrian Kelly.
"In the current circumstances some larger insurers have adopted a case by case approach which may include not relying on trigger clauses like eviction notices – this would not have occurred prior to COVID 19.
"So for landlords the best advice is to contact their insurer and get clear guidance on what they should do. There is no single simple answer."
Mr Kelly said the ICA has advised him that it supports the current approaches taken by state governments to encourage landlords and tenants to renegotiate rental agreements and to also supplement rental incomes where possible.
"Where a landlord and tenant renegotiate rent arrangements, landlords should advise their landlord insurer," said Mr Kelly.
"Where rental payments have been renegotiated between a landlord and tenant it may, under some policies, not constitute a rental default.
"Landlords should contact their insurer with any questions they have on the operation of their specific policy in these circumstances.
"Importantly there is typically no impact on the landlord's ability to claim for damage to a property or any other aspect of the policy not currently excluded."
Mr Kelly said the ICA is still in discussion as to what a uniform approach looks like for landlords and what their real estate agents can advise them.