When does ‘loss of rent’ insurance actually pay out?

The good news? The right specialist policy can step in across a range of situations where your rental income is cut off.

Cover may apply when:

• A renter stops paying due to hardship, breaks the lease, absconds or leaves the property unexpectedly
• A renter refuses to leave and a court order is required to regain possession
• The property becomes unliveable while covered repairs are carried out
• A renter passes away and the property is left vacant or needs restoring

It’s important to know that not every policy is the same. A standard home and contents policy won’t include loss of rent, so you’ll generally need a rental provider policy, and even then, the amount of coverage varies.

The level of cover can depend on what has happened: Shorter disruptions, such as a renter falling behind on rent or leaving unexpectedly, may be covered for a set number of weeks. 

More complex situations often come with longer protection. This could include a renter refusing to leave while a court order is being arranged, a home becoming unliveable after a fire or storm, or rent being lost following the death of a renter. In these cases, the property may remain vacant for months.

If you own a premium rental, check whether your policy has a cap on the weekly rent it will cover.

Losing rental income can be stressful, but having a clear idea of what your policy covers will make a difficult situation easier to manage. If you are unsure, have a chat with your property manager and let them help you review your cover and confirm it reflects the risks associated with your property.