Am I covered for loss of rent?
Loss of rent insurance helps protect your rental income if your property cannot be lived in or your tenant stops paying rent. Under initio’s landlord insurance, loss of rent cover is included automatically. This guide explains when it applies, how much cover you get, and what is not covered. This can also be included in our holiday home cover if you also rent your bach to guests.
Key takeaways
- Loss of rent cover is automatically included with initio landlord insurance and with holiday home insurance where the property is rented to paying guests.
- Standard loss of rent cover is $20,000, with options to increase this to $40,000 or $80,000.
- Loss of rent cover applies if insured damage makes your property uninhabitable, preventing tenants or guests from staying in the property.
- Landlord insurance may also cover loss of rent after a tenant is evicted for non-payment of rent or leaves without giving the required notice, subject to the policy conditions.
- Rent arrears owed before an eviction are not covered, and normal vacancy between tenancies is not covered.
- Holiday home cover includes protection for cancelled guest bookings caused by insured damage, but the eviction and abandonment benefit does not apply to holiday homes.
- To claim under landlord protection benefits, you must be meeting your landlord obligations under the policy.
What is loss of rent insurance?
Loss of rent cover replaces rental income when you cannot collect rent due to certain insured events. This usually happens when:
- Damage makes your property unliveable, or
- A tenant is evicted for non-payment, or
- A tenant leaves without notice.
It helps reduce financial pressure while you repair the property or secure a new tenant.
How much loss of rent cover do I get?
Landlord insurance includes $20,000 of loss of rent cover as standard.
You can increase this to:
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$40,000, or
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$80,000.
For property damage claims, payments stop when:
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Repairs are complete and the property can be rented again, or
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You reach your selected cover limit, or
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12 months of rent has been paid,
whichever happens first.
When does loss of rent cover apply?
At glance
| Situation | Covered? |
|---|---|
| Property becomes uninhabitable due to insured damage | ✅ |
| Tenant evicted for non-payment of rent | ✅ |
| Tenant leaves without notice | ✅ |
| Rent arrears before eviction | ❌ |
| Normal vacancy between tenants | ❌ |
| Cancelled holiday home bookings due to insured damage | ✅ |
| Eviction or abandonment benefit for holiday homes | ❌ |
Property damage that makes the home uninhabitable
If claimable damage means your tenants must move out, loss of rent cover replaces the rental income during repairs.
Example: A flood damages carpets and internal walls. Your tenants move out while repairs are completed. Loss of rent cover replaces the rent you would have received during that period.
Cover is paid until the property is liveable again, up to your selected limit or 12 months.
Tenant eviction for non-payment of rent
If a tenant is more than 21 days behind in rent, you may apply to the Tenancy Tribunal for eviction.
Once the tenant is evicted, landlord protection under your policy can pay up to 6 weeks of rent, or until you find a new tenant, whichever comes first.
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Overdue rent (arrears) before eviction is not covered.
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Your selected property excess applies.
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You must be meeting your landlord obligations under the policy.
Tenant leaves without notice
If a tenant vacates the property unexpectedly and stops paying rent without giving the required notice, the policy can pay up to 6 weeks of lost rent, or until a new tenant is secured, whichever comes first.
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Normal vacancy between tenancies is not covered.
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Your selected property excess applies.
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You must be meeting your landlord obligations.
Does loss of rent apply to holiday homes?
Yes. If you rent out your holiday home to paying guests, loss of rent protection is included.
Holiday home damage and cancelled bookings
If claimable damage makes the property uninhabitable, we will cover lost rental income from cancelled guest bookings.
You automatically receive:
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$20,000 cover, with options to increase.
Payments may consider:
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Confirmed bookings that must be cancelled.
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Expected future bookings, using previous rental income history where appropriate.
The maximum payment is your selected limit or 12 months, whichever comes first.
What does not apply to holiday homes?
The 6-week tenant eviction or abandonment benefit does not apply to holiday homes, as short-term guests do not have formal tenancy agreements.
What is not covered?
Loss of rent cover does not include:
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Rent arrears before eviction.
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Normal vacancy between tenants.
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Guest cancellations unrelated to claimable damage.
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Eviction benefits for holiday homes.
Always ensure you are meeting your landlord obligations under the policy.
Frequently asked questions
Does landlord insurance cover unpaid rent?
Not all unpaid rent is covered. Rent arrears before a tenant is evicted are not covered. However, if a tenant is evicted for non-payment of rent, loss of rent cover may apply for up to six weeks after the eviction, subject to the policy terms and conditions.
How long is loss of rent paid for?
If your property is uninhabitable due to insured damage, payments continue until repairs are complete, you reach your selected cover limit, or 12 months of rent has been paid, whichever happens first. For tenant eviction or abandonment, cover is available for up to six weeks.
Does loss of rent apply if my tenant moves out without notice?
Yes. If a tenant vacates the property without giving the required notice, loss of rent cover may apply for up to six weeks or until you secure a new tenant, whichever happens first, provided the policy conditions are met.
Related Articles:
- Loss of rent FAQs for landlord insurance
- Thinking about becoming a landlord and renting out your home?
- Guide to landlord insurance
- What does landlord insurance cover?
- Protecting your rental from crime
Written by Megan Fisher, Head of Marketing at initio.
Megan has been with initio since 2022 and has over 20 years’ experience in marketing and product strategy. She works closely with initio’s claims and customer experience teams, giving her a first-hand view of how insurance works when customers need it most.