Does landlord insurance cover loss of rent?

One of the biggest financial risks with investment properties is loss of rental income. So it’s understandable to feel concerned when something disrupts that cash flow.

Whether your property becomes uninhabitable after an insured event or your tenant suddenly stops paying rent, understanding how landlord insurance coverage works is an essential part of being a landlord.

What is loss of rent insurance?

Loss of rent insurance may help protect your rental income when your property can’t be lived in after insured events. In simple terms, it can cover the rent for the time your property is being repaired, reducing financial stress. With GIO Landlord Insurance, we’ll pay you loss of rent if your claim is accepted and your property meets our definitions of inhabitable after an insured event.

• Stopped paying rent?
• Left unexpectedly?
• Had their tenancy terminated by a tribunal?

Insurers may refer to this as a tenant default. This is usually an additional cover you can choose with your landlord insurance.

Am I covered for loss of rent?

GIO Landlord Insurance may cover loss of rent depending on your policy, the cover you’ve chosen, and whether your claim meets the policy conditions.

For example, loss of rent may be covered if:

• your property is damaged by an insured event listed in the Product Disclosure Statement (PDS) and can’t be lived in, or
• you have ‘Tenant default’ optional cover, and your tenant stops paying rent in circumstances covered by the policy.

Limits, exclusions, excess and claim conditions apply, so cover depends on your policy and situation. To understand the full range of GIO Landlord Insurance cover, we recommend reading the Product Disclosure Statement (PDS).

Explore GIO Landlord Insurance

How does landlord insurance work?

Loss of rent after an insured event

If your property is damaged by an insured event and it can’t be lived in or re-leased, GIO may pay the weekly rental amount for the time it should take to repair or rebuild the property so that it can be lived in again or re-leased, up to 52 weeks. Insured events include, but aren’t limited to:

• fire (including bushfire)
• malicious damage or vandalism by the tenant or their guests
• storm, flood, lightning and storm surge*, and
• escape of liquid.

When a tenant stops paying rent

With this additional cover, you may be covered if a tenant:

• stops paying rent and doesn’t leave the property
• permanently leaves the property without notice
• passes away (sole tenants only), or
• has their tenancy ended by a tribunal due to hardship.

Specific conditions apply to this cover, for example:

• you must have a valid rental agreement (this doesn’t include any short-term rental, holiday letting or house sharing arrangement)
• rent can’t be in arrears before the policy begins, and
• you must follow the legal steps required under your state or territory’s residential tenancy laws.

The PDS explains all the information you need to understand GIO Landlord Insurance.

Tips to minimise loss of rent risks as a landlord

Insured events aren’t always predictable, but you can help reduce the likelihood of rent loss by:

• completing routine inspections
• keeping the property well‑maintained
• responding to repairs promptly
• screening tenants carefully
• following legislation for arrears and notices, and
• having detailed documentation and inspection reports. This is also handy if you need to make a claim.

When loss of rent doesn’t apply

It’s equally important to understand situations in which claiming loss of rent may not be possible. Being clear on these exclusions helps prevent surprises if you need to make a claim.

You usually won’t be covered if:

• you don’t intend to repair the property after an insured event
• the tenant still legally has to pay rent
• the property can be lived in under insurance definitions
• the property was being used for short‑term holiday letting
• you reduced the rent voluntarily, and
• you don’t have a rental agreement in place with the tenant.

Is landlord insurance for loss of rent worth it?

If you’re a landlord, a sudden loss of rent could create a financial strain. Understanding landlord insurance can help you make informed decisions about your cover.

GIO Landlord Insurance can help safeguard your investment. Choose from Landlord Property Insurance, Landlord Contents Insurance, and for an extra premium you can also add optional covers such as Motor burnout and Accidental damage.

Start your GIO Landlord Insurance quote

Read more:

• How to self-manage your rental property
• What’s the difference between landlord insurance and home insurance?
• How to make a home insurance claim without receipts

^*Actions or movements of the sea and storm surge are not covered (unless the storm surge damage occurs at the same time as damage caused by storm). Other exclusions apply.

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. 

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.