Rent guarantee insurance products suspended due to Covid-19

Rent guarantee insurance product sales are to be suspended for new policies until the coronavirus crisis is over.

Many from the insurance industry deem it unfair to offer this kind of product that requires landlords to begin eviction proceedings if the rent is not beng paid during the pandemic to meet policy requirements. 

It follows the government’s recent announcement that evictions are to be suspended until 1 June at the very least.

On 18 March the government said it is putting forward emergency legislation to suspend new evictions from social or private rented accommodations during the outbreak.

This means that landlords will not be able to start eviction proceedings for this period.

Legislation for this was put in place yesterday following mortgage payers being granted a mortgage holiday of three months last week.

Meanwhile earlier this week insurers began pulling income protection insurance due to the pandemic.

Rent guarantee insurance policies in the UK rest on a clause within the terms and conditions that tenants are served with eviction orders when they stop paying rent to initiate these policy payments.

But these are not the same as income protection insurance policies, for a policyholder to claim on a rent guarantee policy, eviction proceedings need to have been triggered. 

Eviction proceedings

Everett Mead Insurance Brokers (EML) said in a statement on their website: “With immediate effect EML are placing sales of rent guarantee insurance polices on hold.

“It has come to light that in order for a policy holder to claim for rent guarantee on some policies they must start eviction proceedings against the tenant.

“In light of the current covid-19 situation EML cannot condone such action being taken against tenants for something that is totally out of their control. We find such a clause morally unacceptable in the current climate.

“We will not actively benefit from new insurance polices which could have an adverse effect on the lives of other people.”

Blocking evictions

Gig economy workers and the self employed have also been affected by not being able to meet rental payments due to uncertainty in employment at present.

Louise Birriterri, chief executive at Pikl told Insurance Times: “As with most self-employed workers, gig workers on the whole do not have eligibility for company sick pay and many will not have protected themselves with an income protection plan.

“I would like to see the government providing action to financially support these workers if they fall ill. Some gig companies such as Deliveroo do already provide their workers with a personal accident policy and sickness benefit and I understand will be supporting their worker using this policy at this time.

“For those workers concerned they cannot make their rent it’s essential the government steps in to assist. The government’s move to block evictions is a statement aimed at giving reassurance to those workers, however, will raise concerns in the landlord market about if rent payments will be made by the government. Many pensioners have invested in properties to let as a means to top up their pension so it will be important these rents are received.”