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Rest Assured with Landlords Insurance

We all understand the importance of home and Contents insurance, it is though just as important that you have the essential cover for your investment property too, Landlords insurance is very important in ensuring you are protected.

Landlords Insurance covers the landlord against risks that can occur in rental properties which are not included in the strata title or home and contents insurance policies. Although this cover is extremely crucial to investors less than half of landlords in Australia have landlords insurance.

Additional Covers included in landlords insurance include loss of rent, which covers you for loss or rent in the event that the building or contents become unattainable due to damage caused by a defined event.

Other additional covers include strata title mortgagee’s protection, this covers the mortgagee against loss or damage caused by any defined events and deliberate damage by tenants, this covers you for damage arising from deliberate, intentional or malicious acts to the building or contents by the tenant as well as tenants default which covers you the landlord for loss of rent, payable by the tenant.

All investment properties should be equipped with a landlord insurance policy which covers contents damage, loss of rent and personal liability. Even if insurance seems like an unnecessary expense and there is no vacancy rate on the property, landlord insurance gives you peace of mind

Contact eChoice today for further information, our eChoice Insurance consultants can help you find the right cover for you.

Managing Your Property

Managing a rental property on your own, will you save you having to pay the management fee that comes at a cost of about five percent of the property’s rent. However, managing a property can take up a big portion of your time as you will be responsible for tenant complaints regarding damages to your property and the amenities.

If you cannot manage your own rental property, you can enlist the services of a professional property manager that has up-to-date information on the changes in the rental property market they are also able to screen more potential tenants for you sorting through which ones are good-paying tenants and which ones are not.

The service of a professional property services manager is tax-deductible. They offer a lot of benefits for you in managing your property as they have a network of trades people that can be hired at a cheaper cost to you.

Aside from having professional property management, you must insure your property as well against potential problems. It is important that you have proper insurance cover including building insurance to protect you against any problems in regards to you building

It is also important that you have landlord insurance this will protect you against tenant-induced property damage and legal liabilities if the tenant injured themselves. Landlord insurance also protects you against potential lost rental income incase a tenant moves out without paying their rental balance.

Renovating your property is another way to increase your rental fee. Adding a few items or amenities or upgrading your rental property can add value to your property and will increase the value therefore allowing you to increase the rent charged. You must though be careful that the cost of renovations can be covered by the increase in rent.

Landlord Insurance Claims Have Increased

It has been reported that landlord insurance claims have increased by 42% during in the last year and the average total claim by landlords increased by 20% as well.

It is important then that all landlords with fully or partly-furnished properties ensure that their landlord insurance coverage is sufficient. Items that can typically be claimed for with landlord insurance include refrigerators, dishwashers, mattresses, framed pictures, washing machines, beds and plasma televisions. Other more unusual claims include air conditioners, door handles and lawnmowers.

Landlord insurance covers the risks that can occur in rental properties which are not included under the strata title or home and contents insurance policies. The sad fact is however that less than half of Australian landlords do not have landlords insurance.

Many landlords think that are saving money by not having insurance and agent fees, their assets are in danger if they do not have landlord insurance. Even if a landlord has relatively careful and good tenants there is still a danger of damage that can be caused unintentionally that can result in big expenses. Only a landlord-specific insurance would help recover these losses.

Costs incurred by intentional or malicious damage to property, loss of rent due to non-payment, theft and legal liabilities that are filed against the tenant are the most common incidents covered be landlord insurance.

The tenant from hell

It’s every property investors nightmare, the tenant from hell.  This tenant doesn’t pay their rent for months but when they finally leave, it’s a scene of destruction.

Rooms filled with rubbish, carpets ruined and holes in the walls are left by these nightmare tenants. Fortunately these people are the exception and most tenants are no trouble.  However when you strike one of these people you remember it.

There are things you can do to mitigate the risk.  Make sure your property is well presented.  If it’s neat and tidy you are more likely to attract a better tenant.  Do as many background checks as you can and make sure you conduct regular property inspections.  Perhaps even visit the property personally to collect rent in the first few weeks.  Keep on top of any rental arrears.  If the rent is late in the first few weeks, alarm bells should sound immediately.

Landlords insurance also provides a safety net.  It includes covers you for damage to your property, the contents you leave for your tenants and it also covers you for loss of income from the loss of rent.  eChoice insurance has a team of insurance experts who can find the best cover for you at the right price. Even if you have existing cover we can do a free health check and find you a better deal.

FAQ – Landlords Insurance

FREQUENTLY ASKED QUESTIONS

1. What sort of rental property qualifies for a Landlord Protection policy?
A property which is a full-time domestic rental. Full-time means that the initial leases with a tenant are for 3 months or more. After the initial period, it doesn’t matter what form the continuations of the lease take, even if the lease reverts to a periodical lease.

2. Do we cover hardship of a tenant?
Yes, under our Tenants Default section, we cover the owner for lost rent when the tenant obtains a court order cancelling the lease agreement. We treat it as a straightforward default of rent. It is important that the owner/property manager does not agree to the cancellation of the lease. The tenant should apply themselves to the court for relief and the property manager should continue to pursue the tenant for rent arrears until the relief is granted. We will treat the remainder of the lease as claimable in the normal way, provided appropriate measures are taken to re-tenant the property.

3. Do we cover death of a sole tenant?
Yes. Under our Tenants Default section, when a sole tenant dies during a fixed-term or periodic tenancy, we treat the matter as if the tenant had left the premises. The property manager should take reasonable steps to obtain vacant possession and re-let the property. The property manager is also entitled to seek unpaid rent from the deceased estate up until the date of vacant possession. The only difference between this event and a regular default is that we (St. George) do not have the right to pursue the deceased estate for the balance of the lease period rent.

4. Does the policy cover tenants on a periodic lease?
Yes. The only difference between a periodic lease and a fixed-term lease is the amount of notice each is party is required to give to the other. In most states, a periodic lease requires 3 weeks’ notice. Under our Tenant’s Default section, in the case of early vacation by the tenant under a periodic tenancy, we will pay the owner the rent they would have been entitled to if the tenant had given proper notice.

5. Do the tenants need to be in advance of their rent for any period of time?
No, but they can’t be behind either. If the tenant is up-to-date, that’s good enough. If you are asked about PRIOR history of arrears and other breachable behaviour by the tenant, you will have to tell us about this before cover is granted.

6. What is Deliberate Damage?
Deliberate damage is wider than malicious damage. The test we apply is that if the intentional actions (not omissions) of a tenant would, if viewed by a reasonable person, be considered to lead to damage, then the damage is deliberate.

7. How does the bond affect a claim?
We do not deduct the bond from our claim. However, for tenancy matters, if the bond is not used up on legitimate non-insurance related matters, then the remainder of the bond is entitled to be kept by the owner to cover Deliberate Damage and Tenants Default losses. This means that the amount the owner needs to claim from us is reduced by the remaining amount.

8. How can a property manager’s actions affect a claim?
The property manager is the agent of the owner and we treat both as the same person. Both Residential Tenancies Acts and insurance law require that the owner/agent take steps to minimise the loss. In part, this means that the owner/agent needs to pursue breaches as fast as the law allows. If they don’t, the amount lost may be deemed to be increased by the irretrievable time lost as a result of not doing it.
There is a danger of this lost time not being included in the claim settlement. We allow a reasonable time to issue notices.
If an owner wants to give leeway to a defaulting tenant, the owner needs to know that they may be incurring some losses that are unrecoverable from insurance.

9. What excesses can you expect to pay?
Not a lot. There is a standard excess on Defined Events of $50 each claim ($200 for earthquake). Defined Events are those events which occur outside of the tenancy, such as storm, burglary etc.
Claims from within the tenancy, such as Deliberate Damage or Tenants Default are free of any excess. Unless the policy is specifically endorsed otherwise, these are the standard excesses you will pay.
Most other similar covers have excesses on tenant damage or default. Check each policy carefully.

10. Do we cover accidental damage?
We cover accidental damage to fixed glass forming part of Buildings or Contents if we insure the appropriate Buildings or Contents. Some other covers provide an accidental damage cover to other property with a substantial excess. If they treat each item of damage as a separate accident, a separate excess will apply to each item. Therefore the value derived from the cover is not very great. For this reason, we try not to provide what may be seen as a “Claytons” cover.
Under our Deliberate Damage by Tenants cover, some items treated elsewhere as “accidental damage” will be accepted as Deliberate Damage (see FAQ about Deliberate Damage) and will be paid, totally free of excess (under our standard wording).

11. What happens if the tenant pays back some money after a claim has been paid?
If the money paid back to the owner is wholly or partly for specific amounts that have already been recovered under the insurance, that amount of money must be returned to us. Otherwise, it belongs to the owner.

12. What should you do if a tenant calls because we put his/her name on a tenant database?
Refer the tenant to us, we are responsible for maintaining the database entry and can remove it when the debt has been repaid.

13. Is the period between tenancies covered?
Under our Tenant’s Default section, rent loss arising from the failure of a tenant to honour a lease agreement is covered. However, rent for the normal period of unoccupancy which occurs between tenancies and which does not involve breach of a lease is not covered.

14. When should you start clean-up and repairs?
You should start cleanup and repairs immediately after you get vacant possession. However, if you are insured and are claiming for Deliberate Damage you need to call eChoice immediately and discuss the damage before starting repairs. If we want to collect some information about the damage, we will ask you to hold off repairs until this is done and we will pay for any rent loss arising from the additional delay.
You should also complete the repairs as soon as is reasonably possible. Unnecessary delays caused by working weekends only (for example) and the like may prejudice your rent claim.

15. When do you start the process of re-tenanting?
You should start the process of advertising for a new tenant immediately the premises is fit for viewing. This does not necessarily mean when the repairs are complete. Sometimes, a property can be acceptable to a tenant if they can see that repairs are being done and will be complete when they move in.