What is loss of rent insurance?

It is cover for rental income you stop receiving. In practice it splits into two quite separate covers sold under one heading: rent lost because the property cannot be lived in after insured damage, and rent lost because the tenant has stopped paying or left. Policies treat them differently and limit them differently.

How long does loss of rent cover pay for?

It depends on which trigger applies and on the policy. Tower publishes up to eight months' rent on Landlord's Plus where the house is uninhabitable from covered loss or damage while tenanted, and separately up to eight weeks' rent where the tenant was lawfully evicted for non-payment, left without giving required notice, or lawfully stopped paying. AA publishes that it covers rent while it repairs the property, up to the policy limit, where there is a current tenancy agreement.

Does loss of rent cover a tenant who simply stops paying?

Only under the second kind of cover, and only in defined circumstances. Tower's published wording ties its eight weeks' benefit to specific situations — lawful eviction for non-payment, the tenant leaving without required notice, or the tenant lawfully stopping payment because they were prevented from entering or utilities failed. It is not general protection against arrears.

Am I covered for rent lost between tenancies?

Generally no. Ordinary vacancy — the gap while you find a new tenant — is a commercial risk, not an insured event. AA's published condition is that there must be a current tenancy agreement in place. This is one of the most common misunderstandings landlords have about the cover.

Do I need a current tenancy agreement for the cover to work?

AA states that condition explicitly on its own landlord page: cover applies where there is a current tenancy agreement in place and the tenants cannot live in the rental following an insurable event. Other insurers word it differently, so this is worth checking in your own policy rather than assuming.

If you let

Loss of rent: two covers wearing one name

Landlords buy ‘loss of rent’ assuming it means their income is protected. It usually means two narrower things, with different triggers and very different limits.

The short version

Cover A: rent lost because the property is uninhabitable after insured damage. Tower publishes up to eight months on Landlord’s Plus.
Cover B: rent lost because the tenancy failed. Tower publishes up to eight weeks, in defined circumstances only.
AA’s published condition is that there must be a current tenancy agreement in place.
Initio states directly that normal vacancy between tenancies is not covered, and that rent arrears before an eviction are not covered either.
The two covers are limited separately — an eight-month benefit does not mean eight months of arrears.

The split nobody explains at the point of sale

“Loss of rent” sounds like one thing. Read the wordings and it is almost always two.

Cover A — the house is wrecked

A fire, a flood, a storm. The property is uninhabitable, the tenants cannot live there, and the rent stops through no fault of anybody's. This is the version with the generous limit, because it sits alongside a building claim the insurer is already paying.

Tower publishes up to eight months' rent on Landlord's Plus where the house is made uninhabitable by loss or damage covered under the policy while tenanted. AA publishes that where there is a current tenancy agreement and the tenants cannot live in the rental following an insurable event, it covers the rent while the property is repaired, up to the policy limit.

Cover B — the tenancy failed

The building is perfectly fine. The tenant has stopped paying, or gone. This is a completely different risk, and insurers price and limit it accordingly.

Tower publishes up to eight weeks' rent, and — importantly — ties it to specific circumstances: the tenant has been lawfully evicted for not paying rent; has left without giving the required notice; or has lawfully stopped paying rent because they were prevented from entering the house or public utilities failed.

Eight months versus eight weeks, in the same policy, under the same heading. That gap is the single most useful thing for a landlord to understand here.

What is not covered

Ordinary vacancy

The gap between one tenant leaving properly and the next one moving in is a commercial risk you carry. Initio states directly that normal vacancy between tenancies is not covered, and AA's published requirement for a current tenancy agreement in place is the clearest illustration: no tenancy, no rent to lose in the insurer's eyes.

Arrears in general

A tenant falling behind is not by itself the trigger. Initio publishes the position plainly: rent arrears before an eviction are not covered. Its benefit starts once the tenant is more than 21 days behind and has been evicted through the Tenancy Tribunal — and then pays up to six weeks, or until a new tenant is found.

Rent reductions

There are situations where the Residential Tenancies Act requires rent to reduce rather than stop. Under the 2026 meth regulations, for instance, where contamination is confined to a remote and inconsequential part of the property, the rent must reduce to reflect the lost access, and neither party can end the tenancy immediately. Whether a policy responds to a statutory rent reduction is a wording question, and not one to assume in your favour. More on the meth rules.

Questions worth asking about your own policy

Which of the two covers do I actually have, and at what limits?
Does the benefit run in weeks or months, and from what date?
Does it require a current tenancy agreement, and what happens if the tenant abandons?
Is there a stand-down period before it starts paying?
Does it respond to a rent reduction, or only to rent stopping altogether?
If I self-manage, does the insurer require evidence of tenant screening?

That last one is not hypothetical. Tenancy Services notes that some insurers require the landlord to prove thorough tenant checks were done before accepting a claim.

Questions people actually ask

What is loss of rent insurance?: It is cover for rental income you stop receiving. In practice it splits into two quite separate covers sold under one heading: rent lost because the property cannot be lived in after insured damage, and rent lost because the tenant has stopped paying or left. Policies treat them differently and limit them differently.
How long does loss of rent cover pay for?: It depends on which trigger applies and on the policy. Tower publishes up to eight months' rent on Landlord's Plus where the house is uninhabitable from covered loss or damage while tenanted, and separately up to eight weeks' rent where the tenant was lawfully evicted for non-payment, left without giving required notice, or lawfully stopped paying. AA publishes that it covers rent while it repairs the property, up to the policy limit, where there is a current tenancy agreement.
Does loss of rent cover a tenant who simply stops paying?: Only under the second kind of cover, and only in defined circumstances. Tower's published wording ties its eight weeks' benefit to specific situations — lawful eviction for non-payment, the tenant leaving without required notice, or the tenant lawfully stopping payment because they were prevented from entering or utilities failed. It is not general protection against arrears.
Am I covered for rent lost between tenancies?: Generally no. Ordinary vacancy — the gap while you find a new tenant — is a commercial risk, not an insured event. AA's published condition is that there must be a current tenancy agreement in place. This is one of the most common misunderstandings landlords have about the cover.
Do I need a current tenancy agreement for the cover to work?: AA states that condition explicitly on its own landlord page: cover applies where there is a current tenancy agreement in place and the tenants cannot live in the rental following an insurable event. Other insurers word it differently, so this is worth checking in your own policy rather than assuming.

Where this comes from

Insurer limits and conditions are each insurer's own published summaries, retrieved 8 September 2026 from Tower and AA Insurance. The tenant-screening condition and the meth rent-reduction rule are from Tenancy Services (MBIE). Policy wordings govern.

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