Covid-19 Response

LEVEL 2 (from 14 May 2020)

We appreciate that many of our customers will be feeling unsettled by the current and unfolding Covid-19 situation. This is a serious situation which significantly impacts our way of life.

The purpose of this update is to:

  • Assure you that it is business as usual for initio.  As we are a digital insurer the initio website will run as normal.  You can do everything online including making policy changes, adding new cover, and lodging claims.
  • Let you know that we are here to help when you need support on your insurance.  We are working from home – but may not be as quick as usual.  As always, email is best.
  • Provide clarity on how Covid-19 affects your house insurance cover.

Property inspections (Landlords)  Loss of rental income (Landlords)   Common Questions


Property inspections (Landlords)

ALERT LEVEL 2 – Property Inspections can resume

At level 2 the Government has advised that property management functions, such as property inspections, can be carried out in person.  While during Alert Levels 3 and 4 there was no expectation that property inspections would proceed, under level 2 inspections can proceed with caution.  Inspections that were previously deferred under levels 3 and 4 should now be scheduled.

While in Level 2, if a tenant remains isolated in the dwelling, you should:

  • contact the tenant by phone-call or email leading up the deferred or scheduled inspection, and
  • if the tenant at the property is self-isolating or sick, then the inspection should be deferred until after the tenant has been cleared by a health professional.

If you are carrying out an inspection it is important that you practice safe distancing from those living in the property.

You and your tenants health is an absolute priority, if you are concerned then do not risk your safety or that of others.  See our FAQ’s at the bottom of this page for tools and tips on how you can still keep any eye on your property.

Why should property inspections be carried out?
Your initio landlord insurance policy provides a ‘Landlords Protection’ benefit which provides cover for deliberate damage by the tenant, meth and loss of rents.

A usual condition of the cover is that you satisfy the ‘Landlord Obligations’ which includes 3 monthly inspections of your rental property (or 4 monthly for NZPIF members).

Initio is taking a pragmatic approach to this situation. If a landlord or their property manager cannot perform an inspection because of Government restrictions (i.e. Alert level 3-4), or it’s unsafe to do so under other alert levels, then the inspection should be deferred.

We are here to pay claims so rest assured that if there is a pattern of property inspection, leading up to the deferment, and a claim later arises (e.g. for tenant damage, meth contamination, or loss of rents), initio will honour such claims provided the other policy conditions are met.

 

Last updated:  9.03 am 14 May 2020

 

Loss of rental income (Landlords)

Landlord insurance policies, like initio’s, include a Loss of Rents provision that specifies an amount of cover (e.g. $20,000) and a payment period (e.g. 12 months).  This cover is triggered by a physical loss to the home that results in the home being unliveable.  For example, a fire at the home or a burst pipe that floods the home.  The policy responds to cover the physical damage from these things and also the associated loss of rental income while the damage is being repaired and re-tenanted.

Covid-19, like any other illness, does not cause any physical loss to the property, so it does not trigger the loss of rents cover.

What about non payment of rent, am I covered?

If you are an existing initio customer with a current policy, the initio policy does have an additional specific landlord cover benefit that provides for loss of rental income resulting from eviction for non payment of rent or abandonment of the tenant without notice.

As a result of  Covid-19 (and the associated Government measures include New Zealand’s nationwide lockdown), landlords are starting to see rent arrears as result of tenants suffering financial hardship.  To be able to claim for this cover the loss of rent would need to be brought about by either:

Loss of rent following the tenant vacating the home without giving the required notice
The cover is for 6 weeks rent, less any amount recoverable by you from rent you received in advance.

Loss of rent following eviction of the tenant for non-payment of rent
The cover is for 6 weeks rent, less any amount recoverable by you from rent you received in advance.

We realise that it may be impractical (and socially discouraged) to evict and replace tenants during this tough time, so we strongly encourage landlords to work with and communicate with tenants who are suffering financial difficulties.  Government financial support is available to tenants, so its important that you advise your tenant of the ‘Leave and Self Isolation’ support available.  Learn more

Important:  Government intervention regarding eviction for rent arrears.
On 26 March 2020 urgent legislation was passed which:
1.  Freezes rent increases
2.  Eviction of a tenant cannot occur until the tenant is 60 days in arrears (previously 21).

Tenants can still be evicted for threatening behaviour and property damage but can only be evicted for non payment of rent once they are 2 months (60 days) overdue.  This changes substantial the financial exposure dynamic for the landlord.  So again, it is important to keep an open line of communication with your tenant and remind them of government assistance during this unprecedented time.

I couldn’t get tenants into my property because of the lockdown?

You may have lost rent because of the unfortunate timing of the lockdown.  The two common scenarios under which insurance cover is sought are:

a.  No tenant due to move in:  Your previous tenants moved out prior to the lockdown and the property was empty and unable to be re-tenanted during the lockdown, and you didn’t have a signed tenancy agreement with new tenants to move in.  Unfortunately there is no cover under this scenario as the prevention of access (caused by the lockdown) has not caused your tenants to legally stop paying rent – as there are no tenants

b.  Tenant was due to move in:  You had tenants due to move into the property during the lockdown.  As a result of the lockdown access to your property was prevented and your tenant needed to remain in their existing property.  In simple terms your new tenants are not going to pay rent for your property and also the property they were forced to remain in.  In this circumstance its likely the prevention of access clause of the initio landlord cover will provide cover.

 

Temporary suspension of Loss of Rent (from eviction, abandonment, access) for NEW policies only from 9 April 2020

As a result of the Covid-19 virus pandemic, a landlord loosing rental income due to the eviction of the tenant for non payment, or the tenant abandoning the property, is no longer an unexpected and unforeseen risk. As insurance is about the unexpected we are temporarily suspending rents cover for NEW policies (that we created on 9 April 2020 or after) only for eviction, abandonment and access.  We do not want to take on new additional risk for something that is a known issue.

It is important to note that cover for loss of rents following damage (eg water damage, a fire, tenant damage etc) remains as per usual.  It is crucial that all of our customers continue to have this cover.

For the eviction, abandonment and access change, the initio landlord policy is modified as follows:

Covid-19 Loss of Rent (eviction, abandonment, access) – Temporary cover suspension

It is hereby agreed Clauses 2, 3 and 4 are deleted from the “Landlord’s protection” automatic additional benefit in “Section one – Cover for your home” and are not replaced.

This means that your policy provides no cover for loss of rent following:

– The tenant legally stopping payment as allowed by the tenancy agreement following prevention of access to the home or the accidental failure of public utilities, or
– The tenant vacating without giving the required notice, or
– Your eviction of the tenant due to non-payment of rent

We expect to remove the above change to the cover as soon as the Covid-19 situation settles down.

 

Please note that for all existing customer’s policies the cover for loss of rent due to eviction, abandonment, and access remains as per normal (as described above), the cover has not changed.

 


 

What if I own an Airbnb type property?

If you own an Airbnb or Bookabach style property for short stay guests please see our blog.

If you require further general information about loss of rents please see our loss of rents guide also

 

Last updated:  10.22 14 May 2020

Common Covid-19 insurance questions

Short answer is No.   The loss of rents cover needs to be triggered by physical damage to the property, eg a fire or flood which means the house cannot be lived in.

However, If you are an have to evict your tenant due to non payment of rent or if your tenant departs without notice there is 6 weeks of rents cover under the initio policy.  The excess does not apply to this cover.  See the landlord policy wording for full details of cover

IMPORTANT:  for new policies after 8 April 2020 you will not have cover for loss of rent due to eviction and abandonment.  Loss of rent section above for more detail.

 

No,  unfortunately the loss of rents (income) cover needs to be triggered by physical damage to the property.

We have a ‘short term guests’ blog specifically about income losses from Covid-19.  Learn more

No, the alternative accomodation cover is for when your home has suffered physical damage (eg a fire) and you can no longer safely live in the property.

No, your initio house insurance policy will respond as usual.  There is no cover related to Covid, and Covid does not deplete any existing cover also.

No, we do not consider there to by any physical damage to the property, it is simply dirty.  Unfortunately you will have to wear this cost yourself.

No, a house insurance policy is not a medical or income protection policy.

New Zealand has a robust and free healthcare system, please seek medical advice if you have symptoms.

Learn more from the Ministry of Health 

It does not appear that there is support for landlords who suffer rental income losses however there does appear to be support for tenants who have to take leave or self isolate.

Learn more here 

Yes.  See the top of this page for details about property inspections

We get it. There are a number of people who want to keep their distance from others. So as a landlord you could have a situation where the tenant is not sick and is not in isolation but has chosen to ‘lockdown’.

Inspections are an important part of managing the risk at your property, but in theses current times that may not be possible. If a tenant does not want you visiting we recommend that you defer the inspection. However this doesn’t mean that you should completely avoid managing that risk. We recommend that your talk with the tenant and ask them if there is any maintenance, any leaks, or soft flooring they have noticed, any are there any electrical issues, any of the gutters overflowing or water pooling in places it shouldn’t

The best thing is to keep an open line of communication with your tenant. An external inspection of the property is also a good thing to do – even if its just a drive by. Initio confirms that deferring an inspection will not invalidate your insurance cover. However there should be a pattern of property inspections leading up to the Covid-19 environment.

No. If you can do the inspection do it, even if it’s just an external inspection of the property.

At a level 2 alert there is technically nothing preventing a landlord from doing an inspection if there’s no risk. For example the tenant is not home.
Scenarios in which the landlord should not do an inspection are:
– tenant has said they are unwell,
– the tenant is in isolation,
– the landlord is in isolation,
– the landlord has immune issues,
– the landlord or tenant is over 70,
– the property manager has refused to do the inspection (safety of their staff etc.)
– the Government has increase the Covid-19 alert level to level 4 (no contact)

We realise that many landlords want to continue to keep an eye on there major assets, rental properties. So here are a few ways you could still find out what’s happening at your property:

1. Have an open line of communication with your tenant. Ask them questions about the property
a. Ask them if there is any maintenance.  b. Any leaks, or soft flooring they have noticed.  c. Are there any electrical issues.   d. Or seeing that we are heading into winter, are any of the gutters overflowing or water pooling in places it shouldn’t.

2. Facetime or video call your tenant and do a walk through with them.

3. Inspect the outside of the property or do a driveby.

4. Arrange to inspect the property when the tenant is not home (this may not be feasible).