EBM RentCover is stressing the importance of following the government’s rent freeze process after receiving an influx of inquiries from landlords relating to COVID-19.
EBM RentCover Managing Director Sharon Fox-Slater explained while there hadn’t been a notable rise in insurance claims during the past couple months, there had been a significant uptick in inquiries from landlords seeking clarity on what to do should their tenants be unable to pay rent.
“The majority of inquiries we receive is around the eviction freeze and rental reforms,” Ms Fox-Slater said.
“While the new legislation is designed to make lives easier, there is, understandably, a bit of confusion around exactly how the changes are set to impact the management of rental properties and what part insurance plays in it all.
“To help our clients, we provided a state and territory breakdown of the legislation changes and highlighted the rights and responsibilities of landlords during this time.”
Ms Fox-Slater said understanding these rights and responsibilities was important for both landlords and property managers because in order for an insurance claim to be successful, government directives must first be followed.
“So, if a tenant stops paying rent, the first step in most states is for tenants and landlords to work together to find a solution – one that is agreed upon by both parties.
“If that fails, then it is time to contact your insurer to discuss options to submit a claim. If a landlord refuses to work with the tenant to find a solution, a claim may be void because they haven’t followed government advice.”
Meanwhile EBM RentCover is working to continually support landlords in any way they can.
“Our promise to clients is: if you need us, we are here. This has never been more important to us than it is during the COVID-19 pandemic, as landlords are faced with uncertainty and confusion,” she said.
“As every situation is unique, we are reviewing all claims on a case-by-case basis and working with our landlords and property professional clients to ensure they get the most out of their claim settlement.”
Like most insurers, EBM RentCover stopped issuing new landlord insurance policies as the potential ramifications of COVID-19 began to be realised, and Ms Fox-Slater took the time to explain the reasons behind this move.
“Insurance is all about risk and it is designed to cover unforeseen events. Due to the current economic climate on the back of the COVID-19 pandemic, one of the main risks landlords face – rent default – is no longer considered unforeseen. Because the likelihood of rent default has increased, so too has the risk of offering cover to landlords.”
Ms Fox-Slater noted the decision to halt cover was the same as halting cover on fire damage when a bushfire is imminent.
“When COVID-19 first hit, EBM RentCover saw an influx of new business inquiries. Because of the huge volumes we were receiving, we couldn’t properly support our already insured clients – this played a huge part in our decision to halt new business, as we had a responsibility to put our existing clients first.”
But she reassured landlords and property managers new products would soon be available.
“EBM RentCover has been working hard behind the scenes to be able to offer a landlord insurance product during this time. As a result, we will be launching new products back in the market to support landlords during this time,” Ms Fox-Slater said.
“However, the new products will look slightly different to our traditional offering and will exclude cover for rent default, including when a tenant breaks their lease or faces hardship.”
Ms Fox-Slater noted last year alone, EBM RentCover settled more than 6250 claims worth approximately $24 million.
“That’s around 24 claims every business day and an average pay-out of about $3800 per claim. If those landlords had decided not to insure their property, that $24 million worth of damage and loss would have been footed by the landlord.
“If the COVID-19 pandemic has taught us anything, it is that none of us truly know when disaster might strike. Whether it is a pandemic, bushfire, flash-flooding, or tenant related loss or damage, insurance is there to step in when things go wrong.”