Rental reforms and landlord insurance

New tenancy rules are set to come into effect in several jurisdictions across the country this year, as the states and territories continue to review legislation. Some of the changes have ramifications for landlord insurance. Read on to find out more… 

Over the past few years, state and territory governments have been reforming tenancy legislation (download our 'State of Play' guide here). While the specifics of the reforms differ across the jurisdictions, key changes with potential to impact landlord insurance are being implemented.  

Several jurisdictions have already legislated changes to give tenants more control over their environment, with fewer restrictions on pets, permission to make minor modifications to rental properties, limitations on rent hikes and no penalties for domestic violence survivors who break a lease. Other governments are in the process of enacting reforms. 

Several of the rental reforms have the potential to impact landlord insurance cover, and landlords and agents should review existing policies to ensure cover is adequate. 

Make sure you check the legislation in your state or territory to determine the exact impacts on your investment property. 

Here are some of the key changes: 

Pets 

In many jurisdictions, landlords will not be able to refuse tenants who want to keep pets at the rental. While it is the responsibility of the tenant to repair any damage caused by their pet, in the event they fail to make good, landlords may look to their insurance to cover repairs. 

Many landlord insurance providers do not offer cover for pet damage at all, while others may impose low claim limits or place restrictions on cover (such as naming the pet on the lease).  

Landlords should check that their policy includes pet damage, the limits of cover and any conditions. EBM RentCover policies provide up to $70,000 for pet damage and place no onerous conditions on cover. 

Modifications 

Tenants in most states and territories will be able to make minor modifications to their rentals with, and sometimes without, landlord permission. 

As any type of work at the property increases the risk of accidental damage, landlords will need to check they have the relevant protection – some insurers only offer this as an additional level of cover. EBM RentCover automatically provides up to $70,000 cover for accidental damage. 

Certain works also need to be undertaken by licenced trades, such as plumbing and electrical, and failure to comply with this requirement could void the insurance. 

There could also be an increased liability risk from injury or property damage. Be sure to check that the policy includes legal liability cover. All EBM RentCover policies include legal liability cover (up to $30 million).   

And while most legislation includes provisions requiring the tenant to return the premises to its un-modified state upon the end of the lease, if they don’t, the landlord may need to claim for tenant damage on their insurance. 

Modifications (minor or otherwise) made without the landlord’s consent are considered by many insurers to be ‘deliberate’ or tenant-related damage. Most insurers do not offer cover for this type of damage. EBM RentCover provides up to $70,000 cover for intentional damage. 

Breaking leases 

New rules concerning breaking leases and tenants not incurring penalties for doing so (primarily in domestic violence situations) are being implemented and under consideration across the country. 

Any changes to responsibilities for broken leases which result in landlords being left out-of-pocket could impact loss of rent claims. 

Policies should be reviewed to check loss of rent provisions and the terms and conditions that apply to claims. 

Minimum standards 

In general, the condition of a premises can have a direct impact on whether an insurer will take on the risk and offer cover. 

The introduction of minimum standards may contribute to an insurers’ assessment of the property’s risk profile. Substandard properties (those which fail to meet health and safety requirements, which already exist in various acts, regulations and codes) are unlikely to be insurable. 

It is already a condition of most building policies (and will remain so) that the premises must be maintained, and failure to undertake maintenance can void a policy. 

This is just a snapshot of some of the changing tenancy legislation. Want to get the full picture of the evolving tenancy landscape? Download our 'State of Play' guide for an in-depth, state-by-state breakdown. Or contact the EBM RentCover team on 1800 661 662 if you have questions about cover and claims.  

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.