This was introduced to protect tenants from eviction due to Coronavirus (COVID-19). The accompanying government guidance has also been very clear that landlords and letting agents will be expected to demonstrate they have been engaged in active negotiation to achieve a compromise with the tenant before taking any legal steps. This means that unless a meaningful attempt has been made to reach an agreement, possession orders may not be granted.
As a result of this it was necessary to suspend all new business sales of Legal Expenses & Rent Guarantee Insurance and review the product offered.
This period of time has enabled insurers to fully assess the impact on the insurance market and subsequently relaunch a temporary COVID-19 product. It has taken into account the expected increase in claims severity and frequency as a result of:
- Increased unemployment and applications for Universal Credit
- The Government’s furlough scheme to be reduced over the next few months
- Warning of a future severe global financial recession
In addition insurers have agreed a new formal mediation service with the Property Redress Scheme (subject to the claim being accepted), which will form part of the standard claims process prior to initiating formal eviction proceedings. This is a significant development that falls in line with government guidance, and one which will ensure that we are allowing agents, landlords and tenants every opportunity to avoid legal action during these unprecedented times.
In the event that mediation has not been successful, insurers will instruct solicitors to initiate formal legal action by issuing a notice for possession, and then undertaking legal proceedings to regain possession of the property at the point that notice period has expired.
For new claims reported after implementation of The Coronavirus Act 2020, rent guarantee payments (subject to terms and conditions of the policy) will be made if:
- The landlord has actively engaged in mediation with the tenant;
- Parties have been unable to reach an agreement to deal with any rent arrears;
- Solicitors appointed by insurers issue notice for possession to the tenant due to the above circumstances.
New Product Features
- A 12 month policy which can be purchased in conjunction with our Real Estate Insurance policy
- The product provides the new mediation service, mentioned above, which aims to assist in the reduction of the severity and frequency of claims and working within the Government guidelines
- 100% of *Rent Arrears paid to possession, for up to 6 Months (over and above the 2 month excess)
- 2 Month Excess
- **Eviction Costs covered up to GBP1250
- **Mediation Costs covered up to GBP330
*Up to a maximum monthly limit of GBP1500:
**Levels sufficient to cover over 100% of all mediated cases and 85% of all eviction proceedings.
Pricing is as follows:
|Section||Residential Premium||Commercial Premium|
|Landlords Legal Expenses||£10.80 + IPT||£20.00 + IPT|
|Rent Guarantee Insurance*||£282.80 + IPT||£282.80 + IPT|
*Only available in conjunction with Landlords Legal Expenses.
These prices are correct as at September 2020. The premiums payable will be subject to periodic review and may go up or down. We continue to work with insurers so that we are able to enhance the product for the benefit of all of our customers.