Denied insurance claim with EBM because tenant was in arrears

I have just been denied an insurance claim with EBM because my PM had never notified me that my tenants were in arrears. They have now vacated the property and obviously have not paid their rent. I was never informed by the PM that they were behind. Do I have any standing here? Should the PM have told me as soon as the tenant started to fall behind in rent?

"The information provided indicates the rent was in arrears when the policy commenced on 03/05/2018, with rent paid to 26/04/18. While the tenants made further rental payments, they never brought the rent up to date after policy inception.

As the tenants were in arrears prior to policy commencement, and the rent was never brought up to date prior to the tenant vacating the property, the policy will not respond to this loss."


Does this mean my EBM rentcover ultra policy will NOT cover me for my next incoming tenant even if they are not behind in rent?

Does this mean my EBM policy is null and void and was not even working from the beginning, hence I should be refunded the amount?

Bear in mind I have had the same tenant and EBM cover since the day they moved in, during which I switched to TS for a year in between.

 

Update:
Iv actually had a look at my rental statement and it seems they have made a mistake?

Statement 20: Date 30/4/18
paid to 28/04/2018

Rent paid to 19/04/2018 with part payment of $79.80 (previously paid to 12/04/2018 + $79.80)
Rent paid to 26/04/2018 with part payment of $79.80 (previously paid to 19/04/2018 + $79.80)

Statement 21: Date 15/5/18
paid to 12/05/2018

Rent paid to 3/05/2018 with part payment of $79.80 (previously paid to 26/04/2018 + $79.80)
Rent paid to 10/05/2018 with part payment of $79.80 (previously paid to 3/05/2018 + $79.80)

So it seems on the invoice dated 15/5/18, rent was paid to 3/5/18. My policy was taken out on 3/5/18, and rent was paid to date on 3/5/18. Am I correct here?

 

I'm sure @brettc can help if he hasn't already

 

If the PM didn't issue the correct notice then it isn't EBM (or any other insurance company) job to insure this. So I would agree with EBM denying the request.

However you could seek damages against the PM for not providing you with the correct notices which they can claim through their insurance OR can work out some sort of agreement - e.g. no PM fees until the monies has balanced (I would also ask for penalties for lost interest - e.g. an extra couple of weeks free PM).

The policy would still be correct for the new tenant however if this tenant fell behind on rent then the correct notices would need to be issued or again see above. However the new tenant wouldn't be liable for the last tenants shortfall .

Note if the PM didn't cover their mistake I would escalate internally and then look at other PM along with see if it is worth perusing legal action.

 

When did they vacate?

If rent was paid until 3rd May and they vacated on 3rd May then nothing outstanding.

If they vacated after that date and the correct notices were issued then talk (or PM talk) to EBM and give them the correct information.

If they vacated after that date and did not issue the correct notices then talk with PM (see post above)

 

How much money is involved?

 

Not too much money is involved.
Bond was +1640
Rent in arrears was -552
Water in arrears was -170
Cleaner was -200
Damages were -2008


The PM has just sent me their ledger: (tenant vacated AFTER 3rd May)

26/04/2018 13295 Rent Paid to 26/04/2018 with part payment of $79.80 (from 19/04/2018 + $79.80) $435.00 $355.20 (5)
5/05/2018 13752 Rent Paid to 3/05/2018 with part payment of $79.80 (from 26/04/2018 + $79.80) $435.00 $479.49 (7)
12/05/2018 14057 Rent Paid to 10/05/2018 with part payment of $79.80 (from 3/05/2018 + $79.80) $435.00 $479.49 (7)

So it appears that my policy started on the 03/05/18, but my tenants became in arrears on 5/5/18. Im not sure how to read this, but Im assuming as of the 3/5/18, my tenants were not in arrears.

 

The issue here is that tenants were already in arrears when policy commenced. I’m not saying this is the case in this instance but it might look like someone was seeing that there is a potential loss so got insured to avoid that loss.

 

Feels like another loophole by an insurance company to deny a payout. They are happy to collect the fees each year but when you need them to help you, they find something to get out of it. I had multiple policies with AAMI and had been paying them for years. Last year when a tenant did a runner and I tried to claim for it, AAMI apparently had changed their PDS and the fine print said that unless I had a current tenancy agreement with the tenant - not periodic which is absolutely fine with the law - I could only claim a maximum of $150! the one time I needed them, they wouldn't come through. Anyway... packed up my bags and left them as each policy was expiring...

 

its not usual to see me backing insurnace companies, but here it goes

hypothetically if the tenant was in arrears you could make a claim the first day of coverage (assuming they left the first day)
pretty unfair to the insurance company who has to fork out thousands in arrears on day one,

 

Was this a policy renewal so you had EBM on the 2/5 then renewal started 3/5?

Unfortunately you can't start a policy when the tenant is behind because then everyone would go get insurance after the event. It's like crashing your car and ringing up the insurance company and asking for insurance.

However if it's a renewal it's more likely the policy rolls over from the year before and I would expect that during that time the tenant was up to date during the policy. This is conjecture on my behalf but how I would expect it to work.

If you get new tenants they will be up to date with their payments from day 1 and your policy will work again.

 

It sounds like the insurer is unlikely to pay you out, or would be required to if challenged. However, you can contact the claims division of the insurer and offer further evidence to support your claim.
There is a dispute process with insurance as well that you can pursue. I would recommend reading your policy's PDS in case something there can help you.

 

True. You can only claim for future events. If the tenant was in arrears when you took out the policy, arrears won’t be covered. Like if your house is on fire, you can’t phone and take out insurance to cover you

To me, the timing is confusing. @menty , you say the cover only taken out in May this year (when the tenant was in arrears), but further down you say you had the policy since the tenant moved in?
Marg

 

I won't try to decipher the exact dates or anything here, quite simply if you believe there may be an error in the denial you simply need to follow the appeal process which is detailed on your denial letter. The first appeal is very straightforward and should go to the National Claims Manager. Simplest way is to reply to the email you received and attention it to the National Claims Manager.

A couple of hints though.

• Clearly detail the dates you are referring to, where the tenant was paid up to at the time the policy commenced, vacate date etc. Make sure you explain why you believe it may be incorrect as it appears you have had some confusion around dates etc. via your property manager.
• You mentioned that you were with EBM, then went to TS, then back to EBM. Continuity of cover can in some cases have an impact, so make sure you detail the tenant and insurance history clearly, whatever it is. To a claims person this may appear likely to be a gap in cover (such as cease insuring until you realise you have a problem with your tenant, which is obviously not how insurance works).

Like others have said, when you take out landlord insurance with any company you are agreeing that there is not a current problem occurring, Insurer's can't operate on risks where they are essentially on a hiding to nothing, it has to be a balanced risk, so if that wasn't the case, you just need to make sure that's shown clearly.

If you have any problems locating how to send the appeal request feel free to let me know, but you should find it's detailed quite clearly.

 

@brettc , Hi Brett, i am just wondering is there any issues in claiming insurance with EBM if the lease becomes periodic after 1 year fixed lease? The insurance premium has been with EBM dove the start of the 1 year fixed lease. Cheers!

 

Thanks Brett, would this still have been the case if the tenant paid to date with the original EBM policy, then I simply renewed each year, but they were a few days in arrears on each renewal?

 

If you maintained cover throughout with us, with the same tenant as you have described, being in arrears at renewal would not be an issue. The problem is when you are commencing a new policy whilst the tenant is in arrears.

 

Does it matter that on the date I purchased the policy the tenant was not in arrears, but only became in arrears a few days later when the policy was active?

 

No problem at all. Under RentCover, a lease is defined as:

A written agreement between you and a tenant for occupancy of the premises which is;

• allowed by and compliant with legislative requirements in the State or Territory the premises are located in and
• for which a bond equivalent to at least four weeks rent has been paid.

It also includes a tenancy at will which immediately follows the lease

There may be some differences when it comes to the number of weeks that can get paid under certain circumstances, such as "breaking a lease" you may only get the notice period that the tenant was required to give you under a periodic lease / lease continuation, which varies by State (tenancy legislation).

 

Not wanting to dodge the question, but as you are referring to a real claim situation that has already been submitted, it would be best that you go back to the claims area regarding the specifics. It's always really dangerous to get too involved without having all the facts, the claims guys will be happy to go over it with you.