Insurance FAQs for property managers & landlords

Buyers, Property Management, Sellers,  Buyers and sellers,  Property Managers

As the rapid spread of coronavirus (COVID-19) continues to cause significant disruptions globally, Aon recognises that Queensland real estate businesses may also have some concerns around the extent of coverage available under the CGU Landlord Insurance products you distribute in partnership with Aon. As conditions for landlords and tenants continue to rapidly evolve, AON have provided answers to some of the more frequently asked questions in relation to the coverage provided by CGU. Please note given the fluidity of the situation, further responses may be necessary, and we will keep you regularly updated. We hope these Q&As assists in these uncertain times.

Q&A: Property Managers

Q: What occurs if following unemployment due to coronavirus (COVID-19), a tenant wants to break their lease due to financial hardship?
A: Coverage may be available under the rent default section based on hardship, but the normal rules of termination will apply subject to the policy terms and conditions and coverage limits.

Q: Can rent default be claimed if the tenant is unable to pay rent due to coronavirus (COVID-19)?
A: Yes, this is claimable under the rent default section of the policy. Please refer to the Landlord Insurance PDS.

 Q: Can a shortfall be claimed if the landlord and their tenant mutually agree to a reduction in the weekly rental payments?
A: No, the difference in weekly rent is not claimable as this is a mutual agreement between the landlord and tenant.

Q: Can rent default be claimed if the landlord and their tenant mutually agree upon a suspension of their rental payments?
A: No, as this is a mutual agreement between the landlord and the tenant.

Q: Are there any restrictions in place should a landlord wish to take out a new Landlord Insurance policy that might cover a coronavirus (COVID-19) related event?
A: From 5pm AEST, Friday, 3 April 2020, CGU will not be able to offer ‘Rent default and theft by a tenant’ cover on new policies. The cover will remain on all existing policies.

Aon and CGU are committed to helping customers through this difficult period, so CGU will continue to offer cover for Contents, Loss of Rent and Liability on new Landlords Insurance policies. Insurance is intended to protect customers from unforeseen events. During this difficult economic period, it is likely that some tenants will struggle to meet their rental payments and that cover for ‘Rent default and theft by a tenant’ is not unforeseeable and therefore it is not appropriate to offer this cover on new Landlords Insurance policies. This will continue until further advised.

Q: If a tenant were to die inside a leased property from coronavirus (COVID-19), will Landlords Insurance cover a forensic clean and property fumigation?
A: No, however clean-up costs up to the bond amount are permitted as per your lease agreement for reletting expenses.

Q: In the case of a death of a tenant due to coronavirus (COVID-19), how long will rent default cover apply for if the property remains vacant?
A: Landlord Insurance is available to cover the loss of rental income due to the death of a tenant provided that tenant was the only person named on the lease. The policy will pay up to 15 weeks rent with a six-week reletting period. Please note that a $12,000 maximum limit applies.

Q: Coronavirus (COVID-19) may cause a decline in the demand for rental properties. If the tenant’s lease is about to come to an end and I am unable to secure another tenant due to lack of demand in the rental market, will losses be covered?
A: No, the policy does not respond to rental market fluctuations.

Q: If the tenant advises the agent/landlord of a trip overseas and then abandons the property following country lockouts and falls into rental payment arrears, how will insurance respond if it is deemed a claimable event?
A: This is claimable under the rent default section of the policy. Please refer to the Landlord Insurance PDS.

Q: What is the claims process should I need to make a claim?
A: We have a 24-hour claims hotline. Please call 1800 105 900 to lodge your claim over the phone. To help you answer questions from your landlords, we have prepared a separate communication that we recommend you share with them: aon.com.au/landlord

 

Q&A: Landlords

 

Q: What occurs if following unemployment due to COVID-19, tenant wants to break their lease due to financial hardship?
A: Coverage may be available under the rent default section based on hardship, but the normal rules of termination will apply subject to the policy terms and conditions and coverage limits.

Q: Can rent default be claimed if the tenant is unable to pay rent due to coronavirus (COVID-19)?
A: Yes, this is claimable under the rent default section of the policy. Please refer to the Landlord Insurance PDS.

Q: Can a shortfall be claimed if you and your tenant mutually agree to a reduction in the weekly rental payments?
A: No, the difference in weekly rent is not claimable as this is a mutual agreement between you and your tenant.

Q: Can rent default be claimed if you and your tenant mutually agree upon a suspension of their rental payments?
A: No, as this is a mutual agreement between you and your tenant.

Q: Are there any restrictions in place should a landlord wish to take out a new Landlord Insurance policy that might cover a coronavirus (COVID-19) related event?
A: From 5pm AEST, Friday, 3 April 2020, CGU will not be able to offer ‘Rent default and theft by a tenant’ cover on new policies. The cover will remain on all existing policies.

CGU is committed to helping customers through this difficult period, so we will continue to offer cover for ‘Contents, Loss of Rent and Liability’ on new Landlord Insurance policies. Insurance is intended to protect customers from unforeseen events. During this difficult economic period, it is likely that some tenants will struggle to meet their rental payments and that cover for ‘Rent default and theft by a tenant’ is not unforeseeable and therefore it is not appropriate to offer this cover on new Landlord Insurance policies. This will continue until further advised.

Q: If a tenant were to die inside a leased property from the coronavirus (COVID-19), will Landlord Insurance cover a forensic clean and property fumigation?
A: No, however clean-up costs up to the bond amount are permitted as per your lease agreement for reletting expenses.

Q: In the case of a death of a tenant due to the coronavirus (COVID-19), how long will rent default cover apply for if the property remains vacant?
A: Landlord Insurance is available to cover the loss of rental income due to the death of a tenant provided that tenant was the only person named on the lease. The policy will pay up to 15 weeks rent with a six-week reletting period. Please note that a $12,000 maximum limit applies.

Q: It may be the case that coronavirus (COVID-19) may cause a decline in the demand for rental properties. If the tenant’s lease is about to come to an end and I am unable to secure another tenant due to lack of demand in the rental market, will losses be covered?
A: No, the policy does not respond to rental market fluctuations.

Q: If the tenant advises the agent/landlord of a trip overseas and then abandons the property following country lockouts and falls into rental payment arrears, how will insurance respond if it is deemed a claimable event?
A: This is claimable under the rent default section of the policy. Please refer to the Landlord Insurance PDS.

Q: What is the claims process should I need to make a claim?
A: We have a 24-hour claims hotline. Please call 1800 105 900 to lodge your claim over the phone.

Landlord Insurance is arranged by Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL 241141 as agent for the insurer, Insurance Australia Limited ABN 11 000 016 722 AFSL 227681 trading as CGU Insurance. If you purchase this insurance, we will receive a commission that is a percentage of the premium. Further information can be found in our FSG which can be provided upon request.

©2020 Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL No. 241141

In arranging this policy Aon has a binder agreement with Insurance Australia Limited (ABN 11 000 016 722 AFSL 227681) trading as CGU Insurance under which we are authorised to commit Insurance Australia Limited to providing cover without reference to them. When acting under a binder we will be acting under an authority given to Aon by the insurer and will be effecting the insurance contract as agent of the insurer and not as your agent. Any information provided about this policy is general in nature and does not take into account your particular objectives, financial situation and needs. Before making a decision, you should carefully consider all information provided to you. Our binder arrangements with the insurer are such that we remain your agent in the handling of any claim.

SBAF0001R 0331

1800 105 900

aon.com.au/realestate

Contact us today!

 

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