Rental insurance likely to be more in demand as result of Covid 19 weakening SA economy
Category News
One of the effects of the Covid-19 pandemic in the property sector will probably be a marked rise in the call for various forms of rental insurance. Rowan Alexander, Director of Alexander Swart Property, says a greater variety of new offerings will be brought to the insurance market to satisfy this need.
Until now rental insurance has been seen by many to be unnecessary. Although the unreliability of a minority of tenants has had to be taken into account by landlords, credit checking of applicants has become more thorough and buy-to-rent has been seen as one of the less risky investment channels. However, now that the lockdown and related factors are putting huge strain on the economy, it is more possible that increased rent defaults will characterise this sector. This has called for the re-evaluation of rental insurance and it's viability in the modern market. Thus far, said Alexander, most rental insurance policies issued have offered limited cover for very specific instances. The variety of options here will almost certainly rise: to date many policies have focussed on covering the costs of evicting the poor paying tenant (often a lengthy and costly process with big legal bills).
With the arrival of new service providers in this field, future options may cover a far wider range. One such option, for example, could result in the landlord taking a smaller rent on condition that the tenant himself takes out insurance on his ability to make payments. Another could relate to insuring the loss of rental during the time of non-payment, even if the lease is not cancelled. "Whatever the new insurance solutions offered," said Alexander, "it seems that they will be more in demand than ever before and the property industry as a whole will benefit.
These insurance policies will reinstate property investment as one of the sounder investment avenues and, when the present lockdown and recession have been survived, those who have held on to their properties and even increased their portfolios will be in a very strong position."
For further information, please contact Rowan Alexander on cellphone 082 581 3116 or by email : rowan@asproperty.co.za
Author: Rowan Alexander
