Does Landlord Insurance Cover Non Payment of Rent Due to Coronavirus?

PropertyNow is committed to keeping home owners and landlords up to date on the constantly evolving regulations and how best to handle these difficult situations.

Given the current state of the rental market under coronavirus, and the subsequent inability of their tenants’ to cover the rent, landlords are having to ask themselves some difficult questions.

What can they do to guarantee their income if tenants are unable to pay the rent?

Could their landlord insurance cover the loss of income?

Unfortunately, the answer is far from straightforward. It depends on the coverage offered by your specific landlord insurance policy and often doesn’t cover non-payment of rent due to coronavirus. Here’s what else you need to know.

Does landlord insurance cover you for non payment of rent?

As mentioned above, every landlord insurance policy is different so it’s important to check your policy documents or contact your insurer to understand exactly what is and what isn’t covered.

Most policies do still cover liability claims related to the coronavirus, but won’t provide cover for lost income due to the coronavirus unless the tenants need to be evicted.

Remember that it’s always worth making the effort to support your tenant through these difficult times. Help them find the assistance and advice they need to cover their rent and you’ll help reduce stress and potentially ensure your property doesn’t lie empty for extended periods of time.

Can you purchase landlord insurance now?

Although many insurers aren’t currently offering landlord insurance at the moment, that isn’t the case across the industry.

You should still be able to get regular landlord insurance from leading insurers such as Terri Scheer and AAMI as you would at any other time.

It’s worth doing your research and finding the best solution for you that fits your needs and the rules in your state.

Bear in mind that the additional concerns that the industry faces means you may face higher premiums and may not be able to cover non-paying tenants.

Does landlord insurance still cover tenant damage?

Yes, you should still be covered for tenant damage as usual.

Again, it’s worth checking your landlord insurance policy documents or contacting your insurer to check.

What can you do if your tenants are struggling to pay rent due to coronavirus?

If your tenants are struggling to pay rent and you find that you are not covered under your current landlord insurance policy, it’s worth taking the time to work towards a resolution. This could involve reducing or suspending the rent, or breaking a lease early.

Again, there are specific rules and regulations depending on which state you live in so it’s worth reviewing these before you make any decisions. See the article ‘COVID-19 Tenants Not Paying Rent – Eviction Moratorium’ for further information.

Will my landlord insurance cover me if I reduce my tenants’ rent?

If you decide to reduce your tenant’s rent, you need to bear the following in mind:

Most landlord insurance policies won’t cover the difference between the original rental amount and the new, reduced amount. If they still can’t pay the rent, your landlord insurance may cover you, but only for the new reduced amount, and not the full original rental.

Likewise, if you decide to suspend your tenant’s rent altogether for a few weeks, most landlord insurance policies won’t cover you.

Again, this can vary according to your unique insurance policy, so do contact your insurance providers for further information.

Summary

Landlord insurance may cover non-payment of rent due to coronavirus, although it does depend on your policy. Contact your insurers directly to clarify the situation and consider working with your tenant to find the best solution for you all. Times are difficult and we’re in this together. By working together, we can get through.