Hi all,
I have some questions about "continuing" tenancy agreements and whether they are valid in the eyes of insurance companies.
I have been renting out my property in Sydney since May 2006. I entered into a 6-month tenancy agreement in May 2006 which therefore stopped being a "fixed term period" agreement in November 2006. I have not signed a new fixed term agreement so the same tenant is still living there but on a continuing agreement. Also, since the fixed term agreement, I have increased the rent.
I have landlord insurance that protects against rental loss on this property. In their terms and conditions, it mentions: "You are not covered if there is no signed tenancy agreement in force at the time of the loss or damage."
1) Does this mean the insurance company does not recognise a "continuing" tenancy agreement if I were to claim rental loss?
2) Given the current rent has increased from that stated on the fixed term tenancy agreement, will the insurance company insure me only for the initial rental amount or the current rental amount even if I can provide sufficient proof of the current rental amount?
3) Of a more general nature, is it more advisable to be in a fixed term tenancy agreement than a continuing tenancy agreement?Hope my questions/post makes sense…
Thanks in advance.
I asked my ins co if the rent went up do I need to advise them and they said not necessarily. Are your tenants on a periodic tenancy? I would call your ins agency and check with them what their terms are.
If you want to claim against your landlords insurance in terms of rent loss. There must be a written fixed term tenancy in place!
Periodic or continuing tenacies are valid in terms of tenancy legislation but insurance companies (many of them) would require that a written lease be in place before a claim was made.I would suggest to get one drawn up ASAP otherwise you are paying insurance premiums for nothing!
Hi Sark,
I had a similar situation a few years back.
My suggestion is make them fixed and send an update of any increases in rent to the insurance company.
Don't rely on your PM to do it.C2
You should rely on your pm to do it! That's what they are paid for? But do keep on top of them
what insurance company are you using?
Hi there
I do think it depends upon the insurance company.
We had a situation after we lost 2 properties in the Canberra bushfire – we were not required to produce a written fixed term tenancy agreement (because we couldn't in one situation – because the lease had been negotiated – but not yet signed – and was actually in the property destroyed at the time.)
We directed the insurance company to our property manager concerning the other property where there was a fixed term agreement.
As for the terms of the lease agreement – most leases have a holding over clause – that states that similar provisions apply to a periodic lease – except that the rent may increase – if there is a written record of the agreement for an increased rent – surely that should be enough evidence for the insurer – and I would certainly be making complaints to the insurance ombudsman if they denied a claim in those circumstances.Hi all,
Thanks for your replies. It's interesting to see a range of different perspectives on this issue. It does sound as though it is dependent on your insurer.
So far I have contacted my property manager to request copies of the original tenancy agreement and a formal document indicating the latest weekly rental amount.
Once I have those, I will contact my insurer and ask them exactly what they require.
Xenia – my current insurer is CommInsure.
Millions – I am not sure if it is called a periodic tenancy, but from what I read on the NSW Fair Trading website, they refer to it as a "continuing" tenancy agreement.
Cheers.
You can always rely on insurance companies to put a twist to something. If you don't have a fixed agreement they can question the amount of rent being paid against the current market value. If your rent is higher than the current market value they will probably pay only the market value. This is why I say fix fix fix and then it is difficult for them to dispute it.
C2
Here's an update on the situation.
I have called my insurer about what they actually require. They said as long as either you or your property manager has a document(s) that can be counted as a 'legal' document, then the insurer will accept that whether it be a Fixed Tenancy Agreement or not.
I then confirmed with my property manager that the 'Letter of Rental Increase' which they used to inform the tenant of the rental increase is a 'legal' document. She mentioned that this Letter in addition to the original Fixed Tenancy Agreement is what they have used in the past at the Tenancy Tribunal and have always been accepted.
But for certainty's sake going forward, I will always get a new Fixed Tenancy Agreement when the original one expires.
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