A landlord who sought compensation for losses following the death of his tenant has lost his claims dispute after the Australian Financial Complaints Authority (AFCA) found the circumstances of the loss were not coverable under his policy. 

The complainant lodged the claim for a loss of rent and rent default after the sole tenant died on August 26 last year. The two parties had a fixed lease agreement in place until October 20. 

The landlord policy provides cover for rental defaults where a tenant leaves the property before the end of the tenancy period without giving notice and does not pay rent. 

The insured says the tenant “left” the property in the ambulance when they died and argues he should be covered for this under the policy.

IAG declined the claim, saying the circumstances of the tenant’s death did not fall under the policy’s rental default criteria. It also denied cover for the loss of rent as the property had not been damaged. 

The insurer agreed to offer the claimant $1000 with a $600 excess, as per the policy’s terms, which provides cover for up to two weeks rent in circumstances where a sole tenant died before the end of the rent period. 

AFCA agreed with IAG’s decision, saying that the circumstances of the loss did not meet the criteria for the benefits sought by the insured and that the policy “specifically addresses rental loss due to the tenant’s death”.

“In the current complaint, the tenant ‘left’ the property by an ambulance after he was deceased,” AFCA said.

“I am not satisfied the removal of the deceased tenant, by the ambulance, is ‘leaving’ for the purpose of the policy.

“I accept the policy distinctly differentiates between a loss as a result of the tenant’s death and the tenant leaving the property.

“The policy clearly limits the insurer’s liability to only two weeks of rent in the event of the tenant’s death.”

AFCA says IAG was liable for the two weeks of lost rent of up to $1000 and required it to assess and consider whether the property had been damaged after a claim note suggested that there may have been accidental or malicious damage to the property.

The ruling says the insurer would be required to reassess its liability if the damage had been coverable under its policy and rendered the property uninhabitable.

Click here for the ruling.