Landlord Liability Insurance 101: How it Can Help During the Pandemic
The COVID-19 pandemic has caused countless challenges for private individuals and businesses alike. For landlords, it has generated the double difficulty of dealing with tenants who have trouble paying their rent, and of handling regular operations in the midst of a public health crisis.
In the US, 30-40 million tenants are at risk of eviction for falling behind on their rent once the national eviction moratorium expires on December 31.
Statistics show that in the UK, 227,000 people (3% of private renters) have fallen into rent arrears since the pandemic began. Here, a winter truce on eviction enforcement is currently in place. This moratorium does not permit evictions until January 25, 2021, though there are exceptions for serious cases, like those involving anti-social behavior or domestic abuse.
As a consequence of the current situation, many landlords are facing a considerable loss of income. At the same time, they are legally obliged to carry out maintenance and repair tasks.
Landlord liability insurance is a valuable asset in facing these challenges head-on and mitigating negative economic impacts.
What does Landlord Liability Insurance Cover?
In general, landlord liability insurance protects landlords from any potential risks that come with letting their properties. While the exact details vary with the insurance provider and policy, landlord insurance often covers building and contents insurance, property liability, as well as legal protection.
Specifically, many policies also cover risks like tenants defaulting on payments, having to pay legal expenses for evicting tenants, and legal fees resulting from lawsuits brought against the landlord by tenants. In addition, many providers also offer legal advice services and helplines for landlords.
How Does this Help During COVID-19?
During the pandemic, landlord insurance can help in two main ways. It can mitigate the economic burden of losing out on rent, and it can give landlords peace of mind when it comes to legal liability for repairs and maintenance that are difficult or impossible to carry out.
First off, many landlord insurance policies offer rent guarantees. These will help landlords recover rent arrears and defaults owed to them by tenants and ex-tenants. The exact procedure depends on the insurance provider, but in general, it is related to serving an eviction notice. This is still possible, despite the current moratorium. Once the restrictions on evictions end, landlord insurance will also be an asset in navigating the repossession process.
As for the second point, landlord insurance can help during any legal disputes with tenants that may arise from delays on repair and maintenance work.
COVID-19 Add-On Insurance For Landlords
Finally, it is worth mentioning that while many insurance policies include these cover aspects by default, others do not. For landlords who already have liability insurance, it is crucial to check whether theirs does.
If necessary, many insurance providers now also offer specialized policies to cover the particular challenges brought about by COVID-19. The majority of these are short-term add-ons. They focus specifically on rent arrears and defaults, as well as assistance in the eviction process.
