Does Landlord Insurance Cover Rental Vacancies?

Hi All

I was wondering: if your property becomes vacant and you are trying to find a new tenant does landlord insurance generally cover you for the rent you are missing out on for the weeks when the property is vacant? I'm not talking about when the tenant breaks the lease but just a general vacancy. Does such an insurance exist?

Cheers

Leilah

 

Not as far as I know. For FAQs and general advice on landlord insurance:
Landlord Insurance FAQ (USA)
https://www.comparethemarket.com.au/home-contents-insurance/landlords-insurance/ (Australian website)

 

No, vacancy is just part of the deal.

 

Of course not.

(Unless the vacancy is caused by an eviction?)

 

They cover the lease term. If there is no lease and it’s between tenants and past the end of the fixed term lease date then no there is nothing to cover for.

Some developers have a rental gaurantee that covers vacancies but it’s usually built into the price at purchase so you pay for it upfront before you use it.

 

Imagine the premium if landlord insurance covered vacancies!!

There would be no incentive to find tenants

 

General vacancy is simply part of the risk you assume as the landlord. That's why it's important to plan for vacancy every year. I personally plan for a conservative 4 weeks vacancy, per property, per year and if it doesn't eventuate (and it usually doesn't with the right management) then my cash flow projections are in front.

 

When I started out in property investment, I used to use 4 week’s vacancy per property (that is, multiply annual rent by 92.3%).

Now that the portfolio is a lot larger, I find 4 weeks too high as not every property will be vacant that much every year.

So, I now use 2 weeks (multiply annual rent by 96.2%) and I find that far more realistic.

 

In my experience, 2 weeks P.A. is the most appropriate allowance for vacancy factors. For all but the worst of my portfolio it's a perfect conservative figure to use.

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To answer OP's question, definitely no insurance for a general vacancy situation without any complicating factors such as an associated claim made on recently vacated tenants (i.e. where works need to be done to the house, or they broke lease, etc.).

Some developers have a rent guarantee, but it's generally at a really poor rate and is built into the price of your house.

 

It's a good point and I'm probably being too cautious in a way. It basically means I'm planning for 100% vacancy indefinitely on a given property and then some (once you add up each lot of 4 weeks) which is unrealistic however it's always been a safe stop and in the current interest rate environment it's some fat for rejigging the numbers elsewhere when that situation changes.

 

DaveM Insurance Agency would be able to cover you for 4 weeks vacancy per annum. The premium for this policy per annum is the equivalent of 4 weeks rent.

 

+ Admin fees and GST, state and federal taxes and charges and levies apply, *max claim 4 weeks on a 400 dollar excess per claim.

Have a nice day.

 

Better make sure you don't call it insurance or you will have ASIC down on you like a ton of bricks as an Unlicensed Insurer

 

Landlord Protection Plan?

Crazy Daves rental vacancy bonanza?

 

Rental loss assistance

 

This is going back a while but....

03-044 ASIC obtains court orders against unlicensed insurance provider | ASIC - Australian Securities and Investments Commission

 

That was really helpful info everyone. Thanks for clarifying and good point, I will factor four weeks vacancy a year per property, just to be on the conservative side.