Landlord insurance: What are insurers covering during COVID-19?

Landlords looking to insure their investment properties may have noticed a few changes in the landlord insurance market since the COVID-19 pandemic began. We take a look at what changes have occurred and which providers on our database are currently offering cover for rent default and other tenant-related risks.

Canstar’s Ratings Manager Joshua Sale said the insurance landscape had been reshaped by the fallout of the pandemic, particularly when it came to landlords who wanted insurance to cover risks such as unpaid rent. This type of cover is often called rent default, tenant default or loss of rent cover, depending on the insurer.

“Most landlords generally look for cover for tenant-related risks, such as loss of rental income and damage caused by tenants,” Mr Sale said.

“After the National Cabinet announced a temporary six-month freeze on evictions (in March, 2020), the majority of insurers in Australia stopped covering tenant-related risks on new policies until further notice.”

The rental eviction freeze has now ended in some parts of the country and is soon to end in other parts. However, there are still many providers who are not covering certain tenant-related risks.

If you’re wondering what coverage insurance providers are offering now, Canstar has put together a table showing the providers on our database that are offering coverage for the following scenarios:

• Rent default – ordinarily, this covers events such as missed rent payments, loss of income due to a property being vacant, and legal costs involved with pursuing a tenant for rent.
• Tenant theft – this typically covers loss or damage caused by theft or attempted theft by tenants or guests.
• Malicious damage by a tenant – this generally covers malicious damage by a tenant or a guest, such as “trashing” a property, graffiti or other deliberate acts of vandalism.
• Loss of rent due to an insured event – this typically covers you if there is an insured event, such as a flood, fire or storm, and your rental property cannot be lived in.

If you have an existing policy, you should still expect to be covered for any tenant risks listed in the relevant Product Disclosure Statement (PDS). However, Mr Sale says it’s important to check with your insurance provider to confirm the details of what you are and aren’t covered for.

What is currently on offer?

Canstar has rounded up the types of coverage available from insurance providers on our database for new policies at the time of writing. Coverage may be offered as a standard inclusion, as an optional inclusion or not at all. If it is an optional inclusion, this means you will have to pay extra for it.

It’s important to check with any individual insurance provider you’re considering for more information on what it will and won’t cover, any exclusions, limitations or eligibility criteria that apply, and how much optional cover could cost you on top of the base premium for a policy.

Please note that we have not included providers who are not offering landlord insurance to new customers.

standard inclusion, optional inclusion, not included. 

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Product	Rent Default	Tenant Theft	Malicious Damage by tenant	Loss of Rent from an Insured Event
AAMI – Landlord Insurance
Allianz Australia – Landlord Insurance
ANZ – Landlord Insurance
AON – Rental Protection Plus
APIA – Landlord Insurance
Australia Post – Landlord Insurance
Australian Unity Insurance – Landlords Insurance
Bank of Melbourne – Essential Care Landlord Insurance
Bank of Melbourne – Quality Care Landlord Insurance
BankSA – Essential Care Landlord Insurance
BankSA – Quality Care Landlord Insurance
Bankwest – Investment Home Package
Bendigo Bank – Landlord Insurance
BOQ – Vero Secure Landlord Insurance
Budget Direct – Landlord Insurance
Bupa Insurance – Landlords Insurance
Catholic Church Insurances – Landlord Insurance
CGU – Landlords Residential Property
CHU – Landlord Insurance for Units/Townhouses
Coles Insurance – Landlord Insurance
CommInsure – Investment Home Package
Elders Insurance – Landlord Cover
Great Southern Bank – Landlord Insurance
GIO – Landlord Insurance
HSBC – Landlord Insurance
Hume Bank – Landlord Insurance
IMB – Secure Landlord Insurance
ING – Landlord Insurance
Kogan Insurance – Landlord’s Cover Insurance
Landlord Select – Landlords Insurance
NAB – NAB Residential Investor Insurance
NRMA Insurance – Landlord Insurance – NSW/ACT/TAS
NRMA Insurance – Landlord Insurance – SA/WA/NT
NRMA Insurance – Landlord Insurance – QLD
Over Fifty Insurance – Landlord Insurance
People’s Choice Credit Union – Landlords Residential Property Insurance
QBE – Landlord Cover
RAA – Landlord Insurance
RAC – Landlord Insurance
RACT – Investor Insurance – Basic
RACT – Investor Insurance – Plus
RACV – Landlord Insurance
Real Insurance – Landlord Insurance
SGIC – Landlord Insurance
SGIO – Landlord Insurance
SGUA – Landlord Extra Protection
SGUA – Landlord Extra Protection Plus
SGUA – Landlord Protection
SGUA – Landlord Protection Plus
St.George Bank – Essential Care Landlord Insurance
St.George Bank – Quality Care Landlord Insurance
Suncorp Insurance – Landlord Insurance
Terri Scheer – Landlord Preferred Policy
Virgin Money – Landlord Insurance
Westpac – Essential Care Landlord Insurance
Westpac – Quality Care Landlord Insurance
YOUI – Landlord Insurance/ for individuals

Source: Canstar database as at 27 October 2021.

What should a landlord do if they are worried about their tenant paying rent?

The Insurance Council of Australia (ICA), an advocacy body for insurance providers, explained on its website that “state and territory governments are encouraging landlords and tenants to negotiate on rent reductions or deferrals if the tenant’s capacity to pay their full rental obligations are affected by COVID-19”.

“These measures are intended to help tenants remain in their homes, rather than be evicted for non-payment or part-payment of their rent. The building, contents and liability protection provided by landlords insurance is not affected when the landlord and tenant agree on rent reductions or deferrals.

“Insurers are treating landlord claims on an individual basis. In cases where a residential tenant is suffering genuine financial hardship as a direct result of COVID-19 and cannot fulfil their rental obligations, insurers will not pursue the tenant for unpaid rent.”

Mr Sale said certain support could still be available for landlords and their tenants who were suffering from the impacts of COVID-19. Landlords should check with their state or territory government to find out what assistance they may be eligible for.

If you are concerned that a tenant’s situation or your own circumstances could affect your ability to meet your home loan repayments, consider speaking to your lender about your options, such as a temporary payment deferral.

Cover image source: seiki14/Shutterstock.com 

Co-author: Amanda Horswill.

Date published: October 27 2021.