The death of a tenant is a tragedy for their family and friends – and it’s a time when landlords need to show true compassion, says Carolyn Majda, General Manager of Terri Scheer Insurance.
“Getting the balance right between compassion and minimising financial loss can be challenging,” she says.
“I initially didn’t think these types of situations happened all that often, and I thought it was good to include it in our policy just in case. But I’ve actually found that when I go around the country and meet with different real estate agencies, most of the property managers have, throughout the course of their career, come across this at least once.”
Often it’s the property manager who is faced with the unfortunate reality of finding the dead body, because they’re the ones who check into the situation to see why the tenant has stopped paying rent.
Majda says that in 2009, Terri Scheer Insurance processed 21 claims on behalf of landlords whose tenants had passed away in their property.
“It surprised me, because it’s more than I thought we’d get,” she says. “It happens more in units than in houses, because that’s when people are more likely to be living on their own. They can be dead for quite a while before anyone finds them.”
Landlord insurance usually provides coverage in this instance, but it will depend on the specific details of your policy.
“Landlord insurance is available to cover the loss of rental income due to the death of a tenant – provided that tenant was the only person named on the lease,” Majda explains.
“If there are two names on the lease, and the surviving tenant is no longer able to pay the rent, the loss of rent would still be covered by landlords insurance, but it would classified differently. The payout wouldn’t relate to the death of the tenant, but would be triggered because the tenant stopped paying rent.”
A good landlord insurance policy should cover the rent arrears and loss of rent that accrues while the tenant’s goods are removed, the property is cleaned and the period of vacancy until a new tenant is found, Madja says.
“You need to check the details of your policy to be certain. In the case of Terri Scheer Insurance’s Landlord Preferred Policy, cover extends for up to 15 weeks or until the property is re-let, whichever is the shorter period of time,” she says.
“Depending on the cause of the death, there can be a bit of stigma attached tot the place, which can make it harder to re-let. So we always takes that into account and cover the loss of rent for an extended period.”
In addition to lost rental income, there should also be a provision for cleaning costs when you process your claim.
“Generally with the composition of the body, bodily fluids can seep into carpets and bedding, and there’s a lot of cleaning that needs to be done, so we take into account those type of things,” Majda adds.
“But I recommend that people really check their policies now, before something like this happens.”
What landlords should do in the event of a tenant’s death:
- Check whether you have a current landlord insurance policy
- Clarify the insurance provisions to determine whether rent arrears and future rent loss are covered in the event of a tenant’s death
- In cooperation with the family, remove the tenant’s belongings
- Clean the property, with the aid of professional cleaners if necessary
- Source a copy of the tenant’s death certificate – insurance companies will require a copy of the tenant’s death certificate, which might not be available until at least four weeks after the tenant’s death and can be sourced from the deceased person’s family
- Landlords who are unable to obtain a copy of the death certificate should contact their insurance company for further advice. Some insurers might accept a death notice from the newspaper in lieu of a death certificate
- Begin advertising the vacancy as soon as is feasible, keeping written evidence of their advertising activity to assist with the insurance claim
- When the property has been re-let, submit an insurance claim with relevant supporting documentation
- Act with care and sensitivity
Source: Terri Scheer Insurance
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