April 1, 2020 by Arian
Landlords & April 1st 2020 Rent Strike
We hope this article finds you well and that you and your family are safe in this unprecedented time.
Landlord Insurance & Rental Income
Landlords have called us to ask if having rental income insurance will cover tenants who are either refusing to pay rent or defaulting due to COVID 19 crisis.
First, to answer the question – the answer is unfortunately no – rental income coverage is not a coverage that will cover defaulting tenants.
What is Rental Income Coverage?
Rental income coverage is an optional coverage on an insurance policy which only kicks in when an “insured peril” occurs to property. In simple terms, property which is insured on your policy must suffer an insured loss, before you can claim rental income coverage. Typically, if a fire happens and you have rental income coverage, the policy will respond to repairing or replacing the damaged property due to the fire and if the property is not habitable and you are unable to collect rent – than rental income coverage can pay for this loss of rent. Typically it is limited to 1 year and/or the $ limit shown on the policy (it should be 100% of your gross annual rent).
Because every policy is different, we still suggest checking with your insurance advisor on the above.
Try to Work with Tenants
In this unprecedented time – mutual respect will go a long way. If a tenant flat out refuses to pay rent just because of the situation – this is obviously not fair to you as the landlord. But, if you are able to extend a helping hand and arrange for a deferral in payment, or a create mutually agreed payment plan that will keep you comfortable and your tenant with a home this can work to be beneficial in the long run for both parties.
In some cases, landlords may not be in a position to work out a deferral or payment plan. In which case making arrangements to defer mortgages, property taxes and other expenses may be options, but there may be caveats such as an increase in interest payments or large payments to be made in the future.
Help From the Government
The government of Canada is taking steps to help individuals, businesses and industries. For specific information, please visit: Canada’s COVID-19 Economical Response Plan:
https://www.canada.ca/en/department-finance/economic-response-plan.html