Landlord Insurance – Are you covered for what you think you are?
A good Landlord Insurance policy typically should cover the following areas:
Landlords building (if required)
Landlords contents (but excluding Landlords goods that are not left for the use of tenants)
Damage by tenant (including malicious and accidental damage)
Loss of Rent
Many Landlords are of the mistaken believe that if they just insure their building, the other things are automatically covered. They are not, unless the policy is written specifically for Landlords and you select all of the above covers.
In recent months we have seen a sharp rise in the amount of claims for Tenant Default. This occurs when the tenant, despite the best efforts of the Property Manager, fails to pay the agreed rent on time and in full. If this occurs the Property Manager must follow a series of steps that may ultimately lead to the tenant being removed from the property under an order from the Tenancy Tribunal.
At this point many Landlords believe that the bond that is retained under the order from the Tribunal will be enough to cover outstanding rent. However, in many cases this is proven to be incorrect. The bond is often used to pay for clean up costs, removal of rubbish, excess water charges and all manner of outstanding costs. If the bond is exhausted by these costs then unless the Landlord has a Landlords Insurance policy that covers Tenant Default, the Landlord may be significantly out of pocket.
Tenant Default can only be paid when an order has been made in favor of the Landlord by the Tenancy Tribunal. In our experience when this occurs there are a number of additional sections on the Landlord’s policy that will offer relief to a Landlord. Repairs to the property after the tenant has left if caused by Malicious or Accidental Damage, Loss of Rent while the repairs are being completed are typical claims scenarios.
If a tenant, guest or visitor suffers personal injury or property damage while on your property and the cause of that loss is something that you are directly responsible for then the Public Liability section of the policy will more than likely respond to the claim on your behalf. Again, we have seen a sharp spike in the number of claims made against Landlords in this area, and if you do not have the correct policy in place then you will be held personally and financially responsible. The costs to defend such claims run into many thousands of dollars even before a judgment and award is made against the Landlord.
In order to protect your assets and to protect the income stream that you derive from that asset it is essential that you purchase the correct cover as a Landlord.
*Advice supplied by Honan Insurance Brokers