Have you got insurance?

To many people having insurance is an essential part of owning or renting a property, so it may come as a surprise to you to hear that there are a large number of tenants and landlords who don’t have insurance, or don’t have the right policy to suit their needs.

We’ll start with the tenants. Many tenants often don’t realise that just because they don’t own the property that they still need to get contents insurance. If a fire was to break out in the house, of course the tenant doesn’t need building insurance but they need to consider all their belongings inside of the building, and of course there is accommodation while they are waiting for the repairs to be done or to find another property.

Unfortunately, we have seen a few cases of this exact scenario take place, where there has been a fire in the property and the tenant did not have contents insurance. It is heartbreaking to see someone lose all of their belongings and have nowhere to live. A lot of the time people are simply not aware, some are under the impression that their belongs would be covered under the owners building insurance, while others don’t see insurance as a priority. Insurance is an extra expense and for many people having one less bill to pay makes a difference, however, it can cost you a lot more if you don’t have a policy in place.

Most of our Landlords, on the other hand, do have some sort of insurance policy but even then, not all of them do. We recommend that not only should Landlords have building insurance but that they also get Landlords insurance and better yet, that they insure their property with a company that specialises in Landlords insurance.

Companies such as Property Insurance Plus (PIP) and Terri Scheer not only insure the building but they specialise in Landlords insurance. We recently had a situation where a Landlord had insurance on their property through another general insurance agency. This Landlord did have Landlords insurance added onto their policy but it was not through an agency that specialises with Landlords insurance.

Agencies that don’t specialise in Landlords insurance, even though they may have a Landlords component will take the first 4 weeks loss of rent from the bond, which only leaves you with 2 weeks rent for a 6 week bond to finalise the clean up and nothing left for a 4 week bond to finalise the clean up. Therefore, if you have a policy that only covers malicious damage and not cleaning or gardening then you are forced to take those expenses from the bond but if you have used most, if not all of the bond on rent then that will come out of your own pocket. They will also charge you an excess for each item you claim. For example, if you are claiming for rent and damage then you will pay 2 excess fees. Each item attracts another excess fee.

Compare that to companies such as PIP and Terri Scheer. They only have one excess fee per claim, rather than per item. They will also allow you to claim the entire loss of rent without any excess, leaving you the entire bond to pay for things that are not claimable.

Below is a break down of the insurance costs taken from a real scenario. As you will see if the Landlord had chosen to insure their property with PIP as opposed to a company that does not specialise in Landlords insurance they would have been reimbursed the entire list of expenses back.

Expenses

• $1340.00 rent
• $ 581.49 water
• $  72.00 keys
• $ 180.00 cleaning
• $ 632.05 BOL fees

Total expenses: $2805.54

 

Landlords chosen insurance company

• $1340.00 rent – Can only claim over 4 weeks $380 x 4 = $1520
• $ 581.49 water – Not claimable
• $  72.00 keys
• $ 180.00 cleaning – Not claimable
• $ 632.05 BOL fees – Not claimable

Payout amount: $72.00

Excess: $300

 

PIP Insurance

• $1340.00 rent
• $ 581.49 water – Bond
• $  72.00 keys – Bond
• $ 180.00 cleaning – Bond
• $ 632.05 BOL fees – Bond
• -$2280.60 Bond

Payout amount $524.94

Excess: NIL

 

As you can see it pays to check what you are covered for and also check that your insurance has not lapsed. Not having insurance or not having the right insurance policy can make a huge difference as this Landlord from Perth discovered. Click here to check out the 9 News article regarding a Landlord who was left with a clean up cost in excess of $30,000 and had no insurance.

 

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Have you got insurance?

08/06/2018

Author: Melissa Chaplin

 

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