Insurance companies not paying out unless fixed term lease in place??

Hi everyone

I received the attached advice with my monthly statement from my rental agency regarding insurance claims and tenants staying on under an expired lease, and thought I would raise it for discussion.

So it appears that you can no longer just assume that as long as you have LL insurance, you are covered. I will have to investigate my TS and EBM insurances to see what they don't pay on if the tenant is on an expired lease....

And, I will bring this to the PM's attention and remind her that this is the fourth time I am requesting that she approach the tenants about renewing their lease (she keeps forgetting...).... :mad:
 

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Maybe send her a letter with an attached authority to be signed that her company will cover you in any claim due to the lack of a lease. That might make her get her act together.

I'd be calling every day until it is signed. It is you who is at risk here. They don't care.
 
Calling our EBM specialist :p

From my knowledge, and I am in Victoria where you cannot force a fixed term lease onto a tenant, both TS and EBM cover periodic leases.

However, some companies (such a banks, or other larger companies you may use for car insurance etc.) do not cover periodic leases.
 
Hi everyone

I received the attached advice with my monthly statement from my rental agency regarding insurance claims and tenants staying on under an expired lease, and thought I would raise it for discussion.

So it appears that you can no longer just assume that as long as you have LL insurance, you are covered. I will have to investigate my TS and EBM insurances to see what they don't pay on if the tenant is on an expired lease....

And, I will bring this to the PM's attention and remind her that this is the fourth time I am requesting that she approach the tenants about renewing their lease (she keeps forgetting...).... :mad:

Best to read your insurance policy contract and see what you agreed to when you took it out. Maybe need to change policies.

And if the PM is not responding just send them an email giving them notice that you will be moving your management over to another company. This will make sure they remember,
 
Sounds like just another way of the property management agency making extra money through leasing fees, though that doesn't explain why your PM wont get back to you..
 
Hi everyone

I received the attached advice with my monthly statement from my rental agency regarding insurance claims and tenants staying on under an expired lease, and thought I would raise it for discussion.

So it appears that you can no longer just assume that as long as you have LL insurance, you are covered. I will have to investigate my TS and EBM insurances to see what they don't pay on if the tenant is on an expired lease....

And, I will bring this to the PM's attention and remind her that this is the fourth time I am requesting that she approach the tenants about renewing their lease (she keeps forgetting...).... :mad:

is your PM a cafe?
 
Sounds like just another way of the property management agency making extra money through leasing fees, though that doesn't explain why your PM wont get back to you..

Unless they don't charge it..

Communication is a number one priority for any business, as a business owner and client of other businesses I expect that someone will get back to me quickly - especially if I'm looking at parting with a few thousand dollars.
 
It varies from insurance company to insurance company. You really need to read the fine print to find out exactly what they do and don't cover and under what circumstances.
 
Differences in policies

Thanks for the comments.

Reading the TS and EBM policies, it appears that both policies cover for both the fixed term and periodic tenancies, although EBM is more detailed in what they will and won't cover in the loss of rent section during the fixed term to periodic term periods (TS appears looser in their definition of a 'permanent tenancy' while EBM is quite prescriptive between defining the fixed term period and periodic lease period).

Interestingly, TS is silent on loss of rent cover due to the tenant vacating the property without notifying the LL. EBM includes vacating as part of their 'Cover for rent' section, TS only includes malicious damage type of events in their loss of rent section.


Anyway, onto the daily emails and letters as Terry_W and Whylie suggest....
 
So it appears that you can no longer just assume that as long as you have LL insurance, you are covered. I will have to investigate my TS and EBM insurances to see what they don't pay on if the tenant is on an expired lease....

Hi Chris

As others have said both EBM and TS provide cover for periodic tenancy/lease continuation. At EBM RentCover it's actually something that a lot of agents have asked us to help highlight to landlords that many of the dircet insurer's (such as banks and major insurers) will not pay unless the tenant is on a fixed term lease. It was actually number 11 on my ebook "12 most common pitfalls when insuring your rental property". We've even done full page ads in industry magazines trying to highlight the problem

But plenty of people don't realise the "little things" that can make a big difference between policies until they get caught out.
 
Many thanks Brett,

Good to see the specialist target their LL insurance to cover the LL and good to know the differences.

As you say, it is those little things that make the difference... :)
 
Hi Brett,

I have never had to claim on LL insurance but may I suggest you move this further up the list maybe into the first 3 points because it is the kind of thing that people Hate about insurance companies.

<<It was actually number 11 on my ebook "12 most common pitfalls when insuring your rental property".>>
 
Hi Brett,

I have never had to claim on LL insurance but may I suggest you move this further up the list maybe into the first 3 points because it is the kind of thing that people Hate about insurance companies.

<<It was actually number 11 on my ebook "12 most common pitfalls when insuring your rental property".>>

Yes it wasn't really a prioritised list, just 12 points worth making in no particular order. It would actually be interesting to see what order of importance people would rate them if asked, I may have to giove some thought to a practical way of doing that.
 
Best to ask your insurer but my understanding is:

1. You are covered

2. If the tenant does a runner you can only claim 2 weeks loss of rent on top of back rent because tenants were only required to give you 2 weeks notice.

3. If its a fixed term lease and they do a runner then rent is covered until a new tenant is found.

So it can be a big difference at the end of the day.

I would never ever let any of the tenants on properties I managed be on a periodic lease. Only time is occurred was if their vacate date was extended to a date past their end of lease. In which case landlord insurance wouldn't be affected anyway.
 
Best to ask your insurer but my understanding is:

1. You are covered

2. If the tenant does a runner you can only claim 2 weeks loss of rent on top of back rent because tenants were only required to give you 2 weeks notice.

3. If its a fixed term lease and they do a runner then rent is covered until a new tenant is found.

So it can be a big difference at the end of the day.

I would never ever let any of the tenants on properties I managed be on a periodic lease. Only time is occurred was if their vacate date was extended to a date past their end of lease. In which case landlord insurance wouldn't be affected anyway.

Hi Jenni

All of your points will depend on the policy, it will vary from one to the next. AIt is certainly not that you are simply covered, some policies WILL NOT pay when teh tenant is on a periodic lease/lease continuation, their PDS makes this very clear and we hear of plenty of cases where they have had claims denied, and they (the landlord) have then found the policy excluded it.
 
Westpac tried to get out of paying me loss of rent as my tenants were on periodical, despite the policy saying there must be a "valid lease" in place, of which a periodical lease is. I finally got them to pay, but immediately changed over to an unambiguous policy with Terri Scheer, which specificially states that they cover fixed and periodical leases.

Westpac also paid NIL towards the $6K "accidental" (as opposed to malicious) damage, so another thing to watch for. Find a policy that also includes accidental damage, not just malicious.
 
Owners have a multitude of risks to manage, including their insurance company.

What is needed on the site is a comparative list of the risks and common insurers. That could be done by providing a check-list for insurers to complete and requesting that they advice of any changes.

But quite apart from any of that, the risk treatments for property investing usually are much better where fixed term leases only are available.

Honestly, why add to an owner's risks when the 'system' is so heavily weighted towards tenants anyhow? It is difficult to imagine many responsible and accountable tenants ever preferring a periodic lease. They are the ones who demanded fixed term leases in the first place and good for them.
 
I actually had this conversation with a landlord yesterday, he had been approached by his bank to purchase their landlords insurance and called me to ask my thoughts on the policy. The lack of cover for a periodic lease is the first thing I mentioned and then sent him some info on EBM and TS.

He called this morning very grateful that I had stopped him from going with his bank when there were better policies and is signing up with EBM. He couldn't believe the difference in cover between what his bank had offered compared to a more specialised policy. It pays to get in the professionals!!! :D
 
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