There is a misconception that when a property is damaged, either due to a natural disaster or flood or fire, or another event, and a property cannot be lived in, either for a short period or an extended period, that the landlord is responsible for providing alternate accommodation for the tenant. This is not the case.
If a property is uninhabitable, the landlord is not responsible for finding alternative accommodation for the tenant, however they would be encouraged to assist if they are able. What a landlord can do, is often determined by their insurance policy coverage. Many landlord insurance policies will provide alternative accommodation for tenants, so it pays to check and if the cost is covered, then it is recommended to provide the tenant with alternative accommodation.
Different insurance companies have different policies, with different limits they will pay and conditions that must be met. Some insurers provide a ‘Landlord Policy’, and others will have a home policy with a landlord’s optional extras or extensions that are often tailored to a client’s needs. First and foremost, we encourage property owners to check if they have landlords’ insurance cover in their homeowners or business policy.
☑ Check if landlords’ insurance cover is included
If not, why not? At a small additional cost homeowners can add landlords cover to their policy. If clients are unsure, we recommend that clients contact their insurer or insurance broker to enquire for more information.
☑ Contact Insurer or Insurance Broker for further enquiries
Ensure that there is a current residential tenancy agreement in place between policy holders and their tenants.
☑ Current residential tenancy agreement in place (in writing)
What are landlords covered for and why do I need it?
A landlord’s cover is similar to a house policy in several ways, it was designed to ease the financial burden of loss or damage arising from the additional risks when renting out a property. Some key risks included under landlord policy coverage are:
☐ Intentional acts, vandalism, or theft by tenants.
☐ Loss of rent when tenants need to move out due to damages clients need to claim on, or if a tenant abandons the property, or if the landlord need to evict a tenant.
☐ Contamination of your home caused by tenants using or manufacturing methamphetamine.
☐ Landlord contents and furnishings damaged by tenants
What if tenants need to be relocated?
In the event that a tenanted property suffers physical damage, and the property is ‘uninhabitable’, meaning the home:
☐ is no longer a safe or sanitary place for anyone to occupy; or
☐ prevented access to the home by order or direction of government or local authorities; or
☐ it no longer has a functional bathroom or kitchen; or
☐ has been determined by government, local authorities, or insurer to be uninhabitable due to physical damage to the home or possible future physical damage to the home.
Then, depending on the insurance policy, a landlord may be covered for the cost of providing alternative accommodation for the tenant. There is generally a time limit placed on the length of insured cover (usually until the premises is repaired or up to 12 months, whichever is the lesser).
What if there is no alternative accommodation coverage?
If a landlords insurance policy does not cover the cost for alternative accommodation, however, the tenant can relocate themselves and return once the repairs are completed, then the rental payments by the tenants will be temporarily suspended from the date the tenant cannot reside at the property and resumes again when they return back to the property, therefore the landlord isn’t liable for the accommodation costs for the tenant. If the property is uninhabitable indefinitely or for an extended period of time, then the landlord must give the tenant at least 7 days’ notice to terminate the tenancy, and the tenant can give 2 days’ notice. The rental payments will cease from the date that the property becomes uninhabitable. If the tenant can continue living at the property, however they cannot access certain areas, then the rental payments should partially abate for that period, reflecting what areas of the premises they are unable to utilise.
Each case will be different, and so will the needs of the tenant. In every case, communication is key so that everyone understands what they are required to do, which is often determined by what the insurer is required to cover. The first place to start in the case of an event, is to speak with the Insurer and be guided by their expertise, and then establish, and where possible, meet the needs of the tenant. If landlords would like more clarity on their insurance coverage, it is recommended that they contact their insurer or insurance broker for advice.
If a landlords insurance policy does not cover the cost for alternative accommodation, however, the tenant can relocate themselves and return once the repairs are completed, then the rental payments by the tenants will be temporarily suspended from the date the tenant cannot reside at the property and resumes again when they return back to the property, therefore the landlord isn’t liable for the accommodation costs for the tenant. If the property is uninhabitable indefinitely or for an extended period of time, then the landlord must give the tenant at least 7 days’ notice to terminate the tenancy, and the tenant can give 2 days’ notice. The rental payments will cease from the date that the property becomes uninhabitable.
If the tenant can continue living at the property, however they cannot access certain areas, then the rental payments should partially abate for that period, reflecting what areas of the premises they are unable to utilise. Each case will be different, and so will the needs of the tenant. In every case, communication is key so that everyone understands what they are required to do, which is often determined by what the insurer is required to cover. The first place to start in the case of an event, is to speak with the Insurer and be guided by their expertise, and then establish, and where possible, meet the needs of the tenant. If landlords would like more clarity on their insurance coverage, it is recommended that they contact their insurer or insurance broker for advice.