Insurers agree that government’s three-month evictions ban, closing courts and a crucial clause in the policies makes selling any more untenable.
In a shock announcement the UK’s leading insurers and brokers have agreed that they are to close their doors to new business for rent guarantee insurance.
One broker has told LandlordZONE that in recent weeks there has been a nine-fold increase in enquiries from landlords seeking this type of insurance as the private rental market has faced the Coronavirus pandemic.
But a clause within these rent guarantee policies means it is now impossible for new policies to be issued.
That clause requires that, for a policyholder to claim for rent guarantee protection, they must start eviction proceedings against their tenant.
“In light of the current Covid-19 situation insurers and brokers are concerned about condoning landlords who take action against tenants for something that is totally out of the tenant’s control, a statement from the insurance industry shown to LandlordZONE says.
“Insurers and brokers will not be selling new insurance policies which could have an adverse effect on the lives of tenants.”
Eddie Hooker, CEO of Hamilton Fraser, points out that existing policies also have this clause, requiring landlords to start eviction proceedings for the cover to kick in.
Over the next two to three months the industry will be tackling the backwash from this announcement, which makes claiming against a rent guarantee product difficult – the government recently revealed that evictions are to be suspended until at least June and the court system is rapidly shutting down, which will soon make eviction proceedings impossible.