Insurance companies stop offering landlord insurance amid coronavirus outbreak

Australian insurers have taken a step back and stopped offering landlord insurance throughout the coronavirus pandemic, leaving many exposed if their tenants stop paying rent.

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Exclusive: Insurers have stopped offering landlord insurance to investors leaving many exposed if their tenants stop paying rent.

Multiple insurers have removed the offering of landlord cover this week amid the coronavirus outbreak which means no new policies can be issued until further notice.

The reason being loss of rent is one key thing covered in most policies but given millions of Australians may be unable to pay their rent this would leave insurers incredibly exposed for mass payouts.

It varies from policy but loss of rent often covers landlords for up to 20 weeks where the tenant has been unable to pay.

Among the insurers doing this include some of the country’s largest brands such as Terri Scheer, Suncorp and NRMA.

Landlord insurance is not being offered by insurers in Australia during the coronavirus pandemic.

Suncorp’s executive general manager of products and portfolio Darren O’Connell said new policies would not be on offered for now.

“Insurance is intended to provide cover for unforeseen events,” he said.

“Given the uncertainty around the evolving COVID-19 situation we were left with no option but to temporarily stop selling new landlord insurance.

“Our focus is on supporting our existing customers through this difficult time.”
Suncorp’s landlord brands including Terri Scheer, Suncorp and Apia and GIO.

Statistics from the Real Estate Institute of Australia showed there are 3.3 million properties which are rented or available for rent nationally.

REIA chief executive officer Adrian Kelly said the impact of tenants being unable to pay rent would be felt by many others including landlords and real estate agents.

REIA chief executive officer Adrian Kelly says “managing rental properties are at risk of not having any safety net for their incomes”.

“The calls to place a moratorium on evictions without offering any way for tenants to meet their rental payments means those maintaining and managing rental properties are at risk of not having any safety net for their incomes,” he said, adding the median rents in Sydney were $510 and Melbourne $500.

Some landlords are even dropping for their rent for tenants who have suddenly become unemployed.

Financial comparison website Mozo’s spokeswoman Kirsty Lamont said turning off landlord insurance would “send shockwaves through the investment property market”.

“With rising unemployment, we’re likely to see a significant jump in the number of people unable to pay rent,” she said.

“Without cover for rental loss if a tenant defaults, landlords could be left high and dry.”

Ms Lamont added landlord insurance typically provided coverage for risks which included loss or damage caused by tenants and loss of rent if a tenant defaulted or broke a lease.

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She urged all landlords who already had landlord cover to check their existing policies.

“It’s important to check the fine print as cover related to loss of rent can vary,” Ms Lamont said.

“For example, not all policies will cover you for the cost of repairs or rental income for not having a tenant.”

The Insurance Council of Australia’s spokesman Campbell Fuller said the temporary embargo on landlord insurance was in place for many insurers.

“Some insurers have temporarily placed an embargo on the sale of landlord insurance policies, or are adjusting what can be covered in future policies,” he said.

“This is due to the uncertainty created by the fast-moving and rapidly changing COVID-19 situation and discussions by governments about rental protection measures and their potential impact on landlords, tenants and insurers.”

Originally published as Insurance companies stop offering landlord insurance amid coronavirus outbreak