Major insurers waive eviction requirements to provide financial relief for landlords

Big insurers are moving to adjust their landlord insurance products to allow holders to claim rental default benefits from their cover without the need for an eviction notice to be served to the tenants. 

The move is in response to mounting pressure on the industry to provide financial relief for landlords following the federal government’s announcement on March 29 of a moratorium on evictions for six months.

Most landlord insurance policies require an eviction notice to be served before benefits can be claimed, leaving many landlords financially vulnerable with tenants failing to meet payments due to the advent of COVID-19.

“We’ve started to see insurers waive that requirement for an eviction notice for a landlord to claim on the rental default policy,” insurance specialist Nicola Middlemiss from Finder said. “Instead, they’re asking landlords to provide proof of the tenant’s financial hardship and their loss of rent.”

In encouraging news for tenants, Allianz, IAG – parent company to NRMA, CGU, SGIO and SGIC and WFI – and Suncorp-owned Terri Scheer have confirmed they would not require eviction notices before landlords could claim for tenant default assistance due to the current circumstances.

Ms Middlemiss said while not every insurer had taken the same steps, it had been a relatively swift and positive move by the industry. She said policyholders with insurers who had not confirmed they were waiving the requirement should still contact their provider to check.

“If you are a landlord and you’re losing rent, it’s really important to get on the front foot and call your insurers as soon as possible, because even if they haven’t explicitly said they will waive the requirement, some insurers are taking things on a case-by-case basis.”

Group executive of financial services at Canstar Steve Mickenbecker said the news was good for tenants, but whether landlords would be able to renew their policy under the same conditions was another question.

Many insurers have already ceased offering landlord insurance to new applicants. Of those who still are, notably Youi and AAMI, rental default cover is no longer available as an option within the coverage.

“Landlord insurance does have those landlord elements in there, but they’re very much watered down to what they were,” Mr Mickenbecker said of the landlord insurance options that remain available.

“There was no policy that we found that covered loss of rent due to tenant default. A number of them also withdrew malicious damage and theft by tenants.”

It was a large responsibility for insurers to take on new policyholders during conditions like these, Ms Middlemiss said.

“Insurance companies have got that responsibility to balance the risk. They need to be confident that they need to cover the existing policies they already have before taking on new [customers],” Ms Middlemiss said.