Am I covered if my tenant stops paying rent?
Landlords insurance has optional coverage for Loss of Rental and for Rent Default.
The Loss of Rental coverage applies after an insured event (damage), and in the event of a Tenant not paying rent relating to COVID-19 there is no insured event that has occurred, so the insurance protection does not respond.
Rent Default is an optional coverage and the risk of a tenant default is often mitigated by the engagement of a professional property manager / real estate firm. The real estate sector provide a valued service, and will be the first point of contact to help manage the process if a tenant stops paying rent.
The bond can often be claimed to meet some of the losses, and is deducted from any insurance considerations.
Insurance provisions generally require ‘all reasonable steps legally available’ to be taken under the relevant Tenancies Act in each state to recover the loss, with the insurance benefit following the outcome of the action to recover the loss.