Discover some of the most common Landlord Insurance claims, and ensure you are protected.
One of the unfortunate realities of investing in real estate is the damage that can occur to your property, and the unexpected expenses that arise as a result.
Even good tenants can accidentally damage your property, and whilst it’s not possible to prepare for every possible damage risk, it is possible to prepare yourself by being aware of what could eventuate.
Furthermore, a good landlord’s insurance policy is an essential form of risk mitigation, as it helps ensure you’re not left out of pocket by thousands (or tens of thousands) of dollars due to someone else’s mistakes.
What are some of the biggest real estate risks and what kind of protection can landlords expect? This property damage FAQ highlights some of the most common questions landlords have:
Q. What is malicious damage?
A. Malicious damage refers to damage to your property that your tenant or their guests purposefully cause, out of spite or malice. An example would be a tenant punching a hole through the wall or intentionally smashing a window.
Q. What is accidental damage?
A. Accidental damage refers to damage that your tenants have caused by mistake. They might spill red wine on the carpet during a dinner party, or accidentally drop a heavy object, which causes a crack in the tiles.
Q. What is deliberate damage?
A. Deliberate damage is not accidental, but is not performed maliciously or out of spite. An example of this is knowingly painting a feature wall, or hammering a nail into the wall to hang a picture up – without permission.
Q. Is tenant-related damage covered under standard building and contents insurance policies?
A. Tenant-related damaged, categorised as malicious, accidental or deliberate, may not be covered under standard building and contents insurance. It is a good idea to carefully read over your policy paperwork to learn what you are covered for. A landlord’s policy will help ensure that you have protection for a range of damage claims, including malicious, accidental and deliberate events.
Q. Do standard building and contents policies cover water damage?
A. Insurers may opt not to cover water damage in certain circumstances, such as due to tenant accidents. It’s up to you as the landlord to weigh up the risk and decide whether protection against flood, storm and general water damage is important to you. If so, speak to your insurer so you’re 100% clear about what your policy covers and excludes.
Q. Is pet damage covered under a landlord’s policy?
A. Because every policy varies, your particular policy may not cover pet damage. Before allowing pets inside your investment property, check with your insurer to confirm what coverage you have.
Q. Is there a way to minimise the risk of pet damage?
A. The decision to allow tenants to keep pets at your property requires much consideration. On one hand, allowing tenants with pets makes your property more desirable. On the other, pets are more likely to cause damage, both inside the house and out.
If you do decide to allow pets, an effective way of minimising the risk of pet damage is to enforce an agreement with the tenant that lays out rules for their pets. It may indicate that pets aren’t allowed inside or on carpeted areas, with these conditions written into the lease.
Be sure to conduct inspections if you suspect that a pet is secretly being housed at your property without permission.
It’s also important to maintain a good, open and honest relationship with your tenant, as this will result in issues being discussed before it’s too late and tenants following your pet policy more closely.