Am I covered for loss of rent?
There are a few scenarios where loss of rental income can occur. Lets explore these:
Loss of Rent – following damage to the property
The primary purpose of loss of rent insurance is to replace loss of income following physical damage. If your house is damaged (e.g. by a fire or burst water pipe) and you can no longer rent it, we will pay for the rents you would otherwise have received while your house is being repaired or rebuilt.
If your property is damaged, we will pay:
12 Months Loss of Rent, up to your selected limit
We provide $20,000 of annual loss of rent cover for free. You do not have to pay extra. You can then pay to increase this to $40,000 or $80,000. If you rent your property for an average of more than $380 p/week we recommend that you increase your cover to the next bracket.
We cover up to any unlimited weekly rent. However, your payments will stop once the loss of rent sum insured has been reached (e.g. $20k) or after 12 months of rent payments (which ever comes first), so again it pays to get your rents limit correct.
Loss of rents payments will also stop once the property is able to be lived in and tenanted again. No additional excess applies to this cover.
Loss of Rent – Following Tenant Eviction or Vacating
As a landlord you are exposed to tenant risk. This can cause loss of rent without physical damage to your property.
Our policy automatically includes a Landlord Protection extension. This covers the following:
a) Loss of rent following tenant eviction for non-payment of rent – 6 Weeks Cover
If your tenant stops paying rent you can evict them through the Tenancy Tribunal if they are over 21 days in rent arrears. We will cover your lost rent following the eviction for up to six weeks, or until you find a new tenant. Its important to note here that the overdue rents are not covered by landlord insurance.
b) Loss of rent following tenant vacating without giving required notice – 6 Weeks Cover
Sometimes tenants might leave your property un-explained, without notice, and stop paying you rent. We will cover you for the six weeks of rent you would have received if they stayed, or until you find a new tenant (whichever is first).
Most insurers do not offer this cover as standard, but because initio is a specialist landlord insurance provider we felt it was important to include the cover, also with no excess applying.
Note that in the Covid environment some loss of rent limitations apply to new policies. Learn more about Covid-19 and its impact on insurance here.
For rental properties you must meet the Landlord’s Obligations specified in landlord insurance policy to have cover for loss of rent following a tenant eviction or vacation. This means regular inspections of the property, the collection of a bond, tenant vetting and other good tenant management.
You do not need to meet these obligation’s if loss of rent has come about from a non-tenancy loss such as a flood or fire.
Loss of Rent – Short Term Accommodation (AirBnb, BookaBach)
We also cover rent following physical damage to short term rentals such as an Airbnb holiday home.
12 Months Loss of Rent, up to the Loss of Rent sum insured you select
Again $20,000 of cover is included for free, with options to pay extra premium to increase this to $40,000 or $80,000.
Weekly rents you receive on your short term accommodation can fluctuate each week. If this is the case we will make a calculation to estimate the lost rent. This takes account of expected bookings, and future actual bookings that you needed to cancel. This includes taking account of the rental income received in the same period in the previous year, or use short-stay occupancy rates in your particular region.
We are unlike other insurers, who will often only cover actual cancelled bookings, and not expected bookings.
Tenant eviction or vacation cover does not apply to short term accommodation, as Airbnb or BookaBach guests do not have a formal tenancy agreement
Learn more about landlord insurance:
Comprehensive Landlord Insurance Guide – Learn more about what is landlord insurance.
Initio Landlord Insurance – Learn about specialist landlord insurance cover with initio.