Tenant deaths in rentals: Can insurance cover the costs? 

While we hope the death of a tenant is something you never have to deal with, sadly and shockingly, many agents are faced with this challenge at some point in their careers.

While confronting, there are some steps you can take to help navigate this situation. 

No agent wants to think about tenants dying but it is a reality that some will face.

Few may experience the trauma of discovering the deceased, but many will have to deal with the fallout of a tenant passing.

During these times, you will no doubt find yourself trying to balance compassion with minimising financial losses.

The death of a tenant is challenging on many levels.

Aside from the emotional toll, and the handling of legalities and paperwork relating to the rental property, there are often costs involved, which can stretch into the thousands of dollars and might not be able to be recouped from the bond or estate. 

This is where we (EBM RentCover – a landlord insurance specialist), can step in.

With the right policy, landlords may be able to claim on their insurance to cover lost rental income, damage, repairs, cleaning and costs associated with re-letting the property. 

How landlord insurance can respond

Most landlord insurance policies will respond to claims relating to tenant deaths, but there are varying levels of cover, inclusions and exclusions.

Unlike EBM RentCover, some insurers may not cover damage, while others may not cover rental losses. 

Won’t the bond or estate pay for losses?

Not necessarily.

In cases where sole tenants pass away, landlords can often face prolonged periods without rental income due to the time required to re-instate the premises, track down next-of-kin to remove possessions or, if the state trustee is handling matters, the time taken for the possessions to be auctioned and the funeral held.

This can add up.

Landlord insurance helps to respond to loss of rental income in this circumstance, provided the deceased was the only person named on the lease, under the tenant death provisions.

Furthermore, landlord insurance may also respond to repair costs if the next-of-kin or executor fails to foot the bill. 

What are some typical exclusions?

As mentioned, some insurers may not cover damage, while others may not cover rental losses.

In addition to this, ‘how’ the tenant dies sometimes matters.

This is not the case at EBM RentCover – whether a sole  tenant simply passes peacefully in their sleep, or the death is far more traumatic, our RentCover Ultra and Platinum policies offer protection for lost rent and damage resulting from the death of a tenant, including murder and suicide.

However, not all insurers are the same and you should check the policy PDS to determine what is covered. 

Obligations and requirements when a tenant dies 

There are state and local laws for handling tenant deaths at rentals which agents must follow, including serving notices, terminating leases, returning bonds, disposing of tenant possessions and disclosures.

One of the main aspects to understand, and convey to your landlord, is that when a tenant dies, the lease does not automatically terminate, nor does the landlord have the right to immediately take possession of the property or remove the tenant’s belongings and you must follow your state’s procedure for ending the lease and returning the bond.

If you do the wrong thing, you and the landlord could find yourselves in legal hot water, which is the last thing you want, on top of an already stressful situation.

How to assist your landlord with an insurance claim

If a sole tenant passes away, the landlord is likely to need to claim on their insurance.

Assist your landlord by:

  • Securing the property as soon as you are notified of a tenant’s passing (and once access is permitted) –
    • make sure the doors and windows are locked and ensure any pets are taken care of
    • take a witness with you when you enter the premises and video the property and its condition
    • don’t let anyone enter the property or remove anything
    • once you are advised of the executor (sight proof), provide them with a key as it is their responsibility to take charge of the tenant’s personal property and arrange cleaning.
  • Contacting the insurer to check cover inclusions and what paperwork is required.
  • Opening the lines of communication with the deceased tenant’s executor or next-of-kin so you can discuss transitioning the rental property back to the owner.
  • Ensuring the landlord gets written notification of a tenant’s death. A copy of the death certificate (or alternative documentation agreed by the insurer) will be needed for the insurance claim.
  • Liaising with the executor or next-of-kin about vacating the property and disposal and removal of the tenant’s possessions.
  • Keeping all receipts for work, such as repairs, required to return the rental to a lettable state. 
  • Documenting all contact with the deceased’s executor or next-of-kin and keeping excellent records about any actions you take regarding the property.
  • Advertising the property for re-leasing as soon as practical and keeping written evidence of advertising activity.
  • Once the property has been re-let, assisting the landlord to submit an insurance claim with relevant supporting documentation.

To sum it up

Dealing with the death of a tenant is not easy.

At EBM RentCover we offer more than landlord insurance – we offer proactive customer service and support.

Our team of compassionate claims specialists can guide you through the process, helping to minimise the emotional and financial stress associated with making an insurance claim, especially in such challenging circumstances.

If you want to chat to us, call 1800 661 662.

Or, if you are not already, partner with EBM RentCover for tailored service and support here.

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