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Holiday rental landlord loses dispute over COVID losses

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A man has lost a dispute with Suncorp after he lodged a claim for lost rental income from cancelled holiday bookings due to the COVID-19 pandemic restrictions.

The man held a Suncorp landlord insurance policy covering his property, which he leased out under an agreement with a resort which managed the holiday rentals on his behalf.

He lodged a claim for lost income from cancelled bookings due to the resort no longer being able to accept bookings during restrictions on movement to stop the spread of COVID-19.

Suncorp denied the claim as the property was used as a holiday rental, saying there was no written rental agreement or periodic rental agreement in place, therefore the policy did not respond to the loss.

A ‘Loss of rent – tenant default’ section of the policy stated “if your tenant stops paying the weekly rental amount during the term of your written rental agreement, or periodic rental agreement, and during the period of insurance but does not leave, we will pay the weekly rental amount for a period up to 14 weeks if you have a written rental agreement; or up to 2 weeks if you have a periodic rental agreement.”

The man argued he was misled when he took out the policy and the consultant advised him he would be covered for loss of rent.

The Australian Financial Complaints Authority (AFCA) said Suncorp was entitled to decline the claim and there was no information to show it misled regarding coverage.

“There is no dispute the complainant did not have a rental agreement in place with any tenant for the insured property,” AFCA said. “Whilst the complainant had an agreement with the resort managing the property, this is not sufficient to meet the requirements for this loss of rent section of the policy.”

The man said there should be a recording of the policy inception conversation on June 20 2014, in which he insisted the consultant advised him he would be covered for loss of rent for the holiday rental.

Suncorp said there was no recording available of the policy inception conversation. The man was clearly informed of the terms and conditions of cover and there was no evidence the insurer advised the complainant loss of rent would be covered, it said.

A copy of Suncorp’s policy screens did not state the complainant was advised loss of rent from his holiday rental would be covered.

“There is limited information regarding the policy inception conversation. The insurer says it cannot locate a phone recording, however it provided the policy screens. There is no information to show, on balance, the insurer provided misleading advice to the complainant at inception,” AFCA said.

AFCA said the landlord was obliged to read the policy documents at each renewal to ensure the cover was suitable for his needs.

See the full ruling here.