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5 of the most common landlord insurance claims

By Simon Webster
As seen on SMH.com.au

In an ideal landlord’s world, you’ve always got tenants in place, one tenancy flows seamlessly into another, and there’s never so much as a knocked-over a cup of tea to sully your pristine property.

But in the real world, things can go wrong. And when they do, it’s important your landlord insurance has you covered. Here are five of most common landlord insurance claims.

“In some policies these are all standard features,” says Carolyn Parrella, Head of Niche Distribution including Terri Scheer Insurance (TSI). “But in others they might be optional extras. It’s important for investors to understand what the risk is and how much they want to be covered for.”

1. Loss of rent

There’s one clear leader when it comes to the most common landlord insurance claims. Loss of rent made up 40 per cent of the claims that TSI dealt with in the year to September 2021, Parrella says.

“It can happen for a number of reasons. You can have loss of rent, for example, if the tenant defaults on their rent and abandons the property with rent owing. Or if you have a damages claim and the property can’t be tenanted for a period of time.”

But despite loss or rent being the most common claim, many policies have it an optional extra, Parrella says.

“Not all policies have it as a standard feature. It’s really important to understand what your cover is.”

2. Tenant damage

In second place is tenant damage, which made up 17 per cent of claims. “Effectively, this is damage that the tenant does to the property,” Parrella says. “This could be accidental damage, or malicious damage, or damage that’s deliberately caused but without malicious intent.

“Malicious damage can be things like holes kicked or punched in the walls. We have a lot of claims like that.

“Accidental damage could be something that has been spilled on a carpet, and the carpet’s ruined. Deliberate damage is something the tenants have done deliberately but not with malicious intent, like hammering nails into the wall to hang pictures without permission.”

3. Water damage

In third place, at 10 per cent of claims, is water damage, such as a leaky pipe damaging a carpet.

If water damages the building, it’s generally covered by building insurance. However, if it damages the landlord’s contents it may be covered by landlord insurance.

“Typically things like curtains and carpets and light fittings are referred to as contents,” Parrella says. “But a lot of homes, especially if you’ve got a holiday rental, for example, will be fully furnished.”

4. Fire

The big three make up the bulk of claims. Of all the other types of claim, fire is among the most common.

And whether it’s caused by an electrical fault or a candle that someone has left burning, it can also be devastating. “There are a lot of fires in winter in tenanted properties,” Parrella says.

Having building insurance in place may cover the loss of your building up to the sum insurance. Landlord insurance may cover the contents owned by the landlord.

 5. Storm damage

If a storm wrecks a carpet or curtains or furniture, it’s good to know you’re covered. Again, any contents damaged in a storm would be covered by a landlord policy; the building may be covered by a building policy.


Disclaimer:

Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy.

The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.

For further information, call 1800 804 016.

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