Is building insurance still valid if the tenants lease reverts to 'continuation' contract

Discussion in 'Property Management' started by Abooking, 8th Oct, 2016.

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  1. Abooking

    Abooking Well-Known Member

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    In NSW tenancy law, if a fixed term lease expires a landlord can choose to simply allowing the lease to revert to a monthly 'continuation' lease.

    If I do this, are building insurance policies / landlords insurance still valid.

    On Monday I will be calling my insurer. Should I be insisting on getting them to speak to the underwriter? A few yrs ago I remember that a policy is not valid in these circumstances. A telephone operator might not give accurate information...

    Has anyone crossed this road before?
    thanks
     
    Abooking, 8th Oct, 2016
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  2. Joynz

    Joynz Well-Known Member

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    There have been lots of discussions about this subject on the forum.

    In essence, yes the insurance is still valid. There is still a lease and lease conditions.

    From memory, the only issue is that if a tenant stops paying rent etc, the amount that you can claim is limited by the length of the lease ( which is now shorter, being periodic).

    In some cases the 'waiting period' can be longer than the periodic lease.

    That's one reason why people often encourage tenants to re- sign for another annual term.
     
    Last edited: 8th Oct, 2016
    Joynz, 8th Oct, 2016
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  3. Mr Dabolina

    Mr Dabolina Well-Known Member

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    They are with most insurance companies (I was covered via Chubb) but I would be reading your Product Disclosure Statement (PDS) to see if you are definitely covered.
     
    Mr Dabolina, 8th Oct, 2016
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  4. Scott No Mates

    Scott No Mates Well-Known Member

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    The lease is continuing under the holdover provisions of the lease. They can't argue that there is no lease.
     
    Scott No Mates, 8th Oct, 2016
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  5. SeafordSunshine

    SeafordSunshine Well-Known Member

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    Generally in NSW, if a lease is expired,
    All the terms and conditions of the lease continue on a 'month to month' basis.
    Perhaps what it means, is that there is a 'new lease' each month?
    I hope this helps
     
    SeafordSunshine, 8th Oct, 2016
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  6. wombat777

    wombat777 Well-Known Member

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    I think you may only have an issue if the property is continuously unoccupied for 6 weeks or more. That's the case with my insurer ( YOUI ). Best to check with your insurer though.
     
    wombat777, 8th Oct, 2016
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  7. dabbler

    dabbler Well-Known Member

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    Read your PDS closely.

    The LL side could be weakened or even practically non existent on periodic depending on insurer.

    The building side should be fine.

    Also vacant periods can cause some problems, again, check specifics on the product.
     
    dabbler, 9th Oct, 2016
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  8. brettc

    brettc Well-Known Member

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    Regardless of the lease terms logically continuing on a periodic lease or lease continuation, I can assure this has been a regular contentious point with many insurance policies. If I recall correctly NSW has been the worst. I would very carefully check your policy, even to the point in getting it in writing that the policy continues even after the fixed term agreement has expired. We have heard of plenty of cases from both landlords and property managers where they have found that their policy will not cover them in this instance. It is often with the major direct insurers.

    It largely gets down to the definition of a lease within their policy definitions.

    To give you an example, what we include as a definition of a lease is:

    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 that will immediately follow the lease

    The important point is specifically including a "tenancy that will immediately follow the lease".which takes out all ambiguity.

    In saying that, as someone else has mentioned, even by continuing the cover there can be an effect on the number of weeks that may be able to be claimed in certain circumstances. For example, if a tenant simply leaves without giving the required notice under a periodic tenancy (which varies by State), you would generally only get what you are legally entitled to (so essentially the notice period that the tenant was actually required to give.

    But as mentioned, some policies appear to not have cover at all as the fixed term has expired.
     
    brettc, 18th Oct, 2016
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  9. wylie

    wylie Moderator Staff Member

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    I called Youi when two leases were expiring, with both tenants wishing to stay on under a periodic lease. Youi confirmed the houses were still covered, but there was some implication that I was happy to accept, but which I cannot recall now, so many months after that call.

    Edit: I've just checked the PDS and I can see nothing about continuing leases. They specifically mention a lease with a start and end date. I think I will question them on this. (It might be somewhere in the fine print, and I'd like to ask them to point out where the PDS states the house is covered on a periodic lease on the provision I've told them, they've noted it and will provide cover. I'd like to see that in writing.)

    I know they record all calls, and I specifically asked the question, but I'd prefer to see it in black and white.

    We have two houses with tenants happy to re-sign, but I don't want to continue to sign three month leases and we may need to clear the houses in order to move them on the blocks. But now I'm thinking I'll continue with the three month leases, just in case.
     
    Last edited: 18th Oct, 2016
    wylie, 18th Oct, 2016
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  10. dabbler

    dabbler Well-Known Member

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    Hi Wylie, be careful, they record things for their own use, not for you.
     
    dabbler, 18th Oct, 2016
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  11. wylie

    wylie Moderator Staff Member

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    Yes. But I have had one instance where bringing a telco ombudsman into the fray when a service I'd signed up for was not able to be provided did result in having the recorded call provided back to me for clarification.

    It helped my case in that instance, so I wonder if they "have" to provide recordings or transcripts or be hit with a big stick (especially once the ombudsman enters the fray)?

    But I agree, it is a risk. I'd like to see it in black and white.
     
    wylie, 18th Oct, 2016
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  12. dabbler

    dabbler Well-Known Member

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    I think your lucky that it had not been "erased", maybe they did not realise it may help.

    Either way, better to get it in writing :)

    I had 3 CSRs answer one of my questions, 2 yay, 1 nay, sent a letter, I got written confirmation of nay....meant I could choose a better product before any event.
     
    dabbler, 18th Oct, 2016
    #12