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The most common Landlord Insurance claims

If you own rental property, it’s worth considering Landlord Insurance to protect both your investment and your rental income. Landlord Insurance is designed to specifically cover you for tenant-related risks that may not be included under your standard building or contents insurance. As Australia’s leading landlord insurance specialist, Terri Scheer has been assisting landlords with their claims for over 20 years. These are some of the most common claims landlords should be aware of:

1. Loss of rental income

Even the best tenants can sometimes experience sudden and unexpected financial difficulties, leaving them unable to pay the rent for a period of time. Examples of hardship could include the tenant losing their job, or being diagnosed with a serious illness. This can leave uninsured landlords out of pocket and potentially unable to service the loan on their investment property. Collecting arrears can be a very drawn out and expensive process.

Terri Scheer reports that rent default is the most common claim for landlords, accounting for more than a third of all claims.

A landlord insurance policy can cover you for a range of rent loss circumstances, such as when the tenant’s lease has been terminated by court order following failure to pay rent, the tenant absconds, tenant hardship or sole tenant death. It’s important to be aware that the bond may not cover all incurred losses, and that a specialist landlord insurance policy can help protect against financial loss.

2. Malicious and accidental damage

Damage to property can leave landlords with large repair bills and significant replacement costs. This is the second most common landlord insurance claim.

Malicious damage to your property, either by the tenant, their family or friends, is damage motivated by malice, vindictiveness or spite. Examples of malicious damage can include holes kicked into doors and walls, slashed curtains and smashed windows.

By contrast, accidental damage is sudden or unexpected damage that is not deliberate or malicious, such as cracked floor tiles after a heavy saucepan is dropped, or wine spilt on carpet.

A tailored landlord policy can be invaluable in the event of such events, as a standard building and contents insurance policy may not cover landlords for tenant related damage.

3. Water damage

Water damage to the contents of a rental property is also a common insurance claim. In some cases, it may be caused by the tenant or faulty appliances and fittings (e.g. leaks from a washing machine or dishwasher) or by problems relating to the property (such as a burst pipe or a leaking sink).

Many standard building and contents policies exclude water damage due to accidents caused by the tenant, or limit cover to the contents, not the building, so it’s important to have landlord insurance to cover as many contingencies as possible.

As a property owner, it is also advisable to check the extent to which you are covered for storm, flood and general water damage to your property, and to understand any exclusions of cover.

4. The death of a tenant

The death of a tenant is tragic and, unfortunately, not all that uncommon. Landlords will need to adopt a compassionate approach when dealing with the tenant's family and friends, and also cooperate with the police. They will also ensure the tenant’s belongings are taken care of, the property is cleaned, and all appropriate paperwork is obtained.

Where the tenant is the sole person named on the lease, you may be covered for the loss of rent incurred as a result of the tenant’s passing.

Landlord insurance provides investors with financial protection for a range of situations relating to property ownership and should be seriously considered by every investor. As Australia’s leading landlord insurance specialist, Terri Scheer is well placed to assist property investors with their insurance requirements and has compiled these handy resources to help do so.

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