RSS Feed

Rene Swindley: what does loss of rent insurance actually cover?

Thursday, August 13, 2020


If a rental property suffers damage that makes it unliveable, the house will become unoccupied and the landlord will lose rental income until the house can be repaired and re-tenanted.

Damage caused by major events like flooding, earthquake or fire could take months to repair, meaning months of no rental income. Loss of rent insurance is designed to put the landlord in the same position they would have been if the property was still occupied, and this is particularly important if the landlord has mortgage payments to make.

Some insurers also offer a capped cover (e.g. 6 weeks) for tenant eviction and tenant abandonment. This cover does not require there to be any physical damage to the property.

What to look out for

Most landlord insurers provide loss of rent insurance (that results from damage to the house) with a pay-out period of 12 months. Never assume that because you have landlord insurance that you have loss of rents cover. Make sure that you check that:

  • Loss of rent is actually activated on your policy, as many insurers offer it as optional cover.
  • The value/limit of the rent cover is reflective of your actual rent. $20,000 is a standard limit of cover, and that’s about $380 p/week, so you may need to increase the cover.
  • Not all insurers offer loss of rent from abandonment and eviction.
Common misconceptions 

There are many misconceptions when it comes to loss of rents. Some of the most common include landlords wrongly believing that:

  • It is the landlords responsibility to find and pay for accommodation for their tenant if a house becomes unliveable because of damage (e.g. water damage). In most cases the tenant will not be required to pay rent, and they will need to find and pay for their own accommodation. If the tenant has contents insurance it’s likely their policy will include cover for ‘Alternative Accommodation’ to pay for the additional cost.
  • That loss of rent insurance will keep paying until the house is rebuilt or repaired. Loss of rent will usually stop after 12 months or the limit of cover is reached, whichever comes first. It’s not an open ended cover.
  • Loss of rent resulting from eviction or abandonment will cover the overdue rents. Cover only applies to lost rents following the eviction or vacation of the tenant. It's designed to cover the period between the eviction and the new tenants moving in, essentially providing six weeks to replace the tenants.

Read the full article and learn more about Initio’s landlord insurance that automatically includes both types of loss of rent insurance.



Rene Swindley

Rene is the Founder and Director of Initio Insurance.





Recent Posts


fixed-term tenancy airbnb housing package ocr Level 4 nzpif trust Must know insulation bond form Market report government Investor story rental market cat Editor's Choice termination bond election 2017 unitary plan auckland council Kris Pedersen Mortgages and Insurance mortgage off the plan p lab property will shortland chartered accountants re agent rta reform sale and purchase television election2020 heating clnz short-term rental tenancy services HHGA apia Case study advice investment strategy principal and interest landlord interest rates anti-social behaviour property value market rent letting cash-flow Standards New Zealand parry v inglis Guest blog Gluckman daikin RTAA 2019 buying first home buying property apprentice relationship positive cash flow Jeff Bezos tenant TCIT Tribunal case study housing affordability retaliatory notice trespass khh rental wof legal legal cost productivity negotiation rent control privacy beginner investor structure insurance auckland rent boarding house asbestos partners letting fee anz investor covid-19 capital gain subdivision interest limitation banking twg report winz ask an expert smoke alarm bankruptcy interest deductibility data security building speculator housing bubble inspection short term rental Landlording interest only wins personal growth debt to income robert kiyosaki damage property cycle warren buffett Holler meth contamination recycling equity shower dome Must knows tenancy issues Investment tip property management return water bill rent increase market initio mindset tax income wealth creation ventilation Zodiak Management financial advisers act HSWA business sublease renovation commerce commission yield watercare reserve bank debt enforcement Question and answer buyer's agent heat pump extractor fan finance quiet enjoyment house prices buying rules worksafe rtaa2020 heater education HHS travel bubble trademe RBNZ skill shortage opes partners kiwibuild ird management lvr minor dwelling tenancy tribunal gluckman report development Q&A meth ring-fencing property maintenance LIM How to Property (Relationships) Act rta Sponsored post brightline CCC early termination rent arrears maintenance DTI cgt barfoot and thompson equity scotney williams holiday house warm up new zealand bad tenant CoreLogic sale and purchas


Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo