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Unpaid rent: what landlord insurance will cover

Every landlord should accept the possibility that, one day, their tenant might fail to pay rent – and that recovering the funds might not be straightforward.

If your tenant is reliable and the arrears were caused by a brief upheaval in their life, you might be able to resolve the issue through direct conversation. But sometimes tenants can find themselves facing an unexpected change in circumstances that leaves them unable to pay rent for a prolonged period.

It’s in situations such as this that landlord’s insurance can prove incredibly valuable. In addition to covering a range of non-payment situations, landlord’s insurance provides ongoing peace of mind for investors who are relying on uninterrupted rental income.

There are a number of different loss-of-rent scenarios that Terri Scheer policies over. These include:

  • Absconding tenant
  • Defaulting tenant (by termination notice or court order)
  • Failure to give vacant possession
  • Death of tenant
  • Hardship
  • Untenantable building or contents (due to damage caused by the tenant or an event)
  • Rent reduction (if you agree to a rent reduction in recognition of damage to the building or contents)
  • Prevention of access (when your tenant can’t access the building)

The length of cover depends on the scenario but, in general, policies pay up to the amount that the landlord would be legally entitled to recover from the tenant under their lease, up to a limit – which varies from four to 52 weeks.

To make a claim for loss of rent, landlords must take reasonable steps to prevent the arrears from occurring. Failure to repair or re-let your property within a reasonable timeframe after it is damaged or vacated can also prevent your loss-of-rent claim succeeding.

For more information what’s covered by our Landlord Insurance, visit terrischeer.com.au/landlord-insurance/


Disclaimer:

Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy.

The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.

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