IN­SUR­ANCE URGED FOR IN­VESTORS

Southern Gazette (South Perth) - - Residential -

PROP­ERTY in­vestors are be­ing re­minded about the of­ten-un­der­es­ti­mated value of spe­cialised land­lord in­sur­ance as pro­tec­tion against ten­antre­lated risk.

Jones Bal­lard Prop­erty Group new busi­ness manager Kayleen East­man said in­sur­ance was one of the most im­por­tant pur­chases for prop­erty in­vestors.

“From an in­vest­ment point of view, land­lord in­sur­ance is a must,” she said.

“Un­for­tu­nately, many prop­erty in­vestors have mis­giv­ings about land­lord in­sur­ance that stems mostly from a lack of un­der­stand­ing about what it ac­tu­ally is, and how it dif­fers from the cov­er­age pro­vided by their ex­ist­ing home in­sur­ance.”

Ms East­man said home in­sur­ance and any land­lord cov­er­age in that pol­icy could be vastly dif­fer­ent to spe­cialised land­lord in­sur­ance.

“There is a com­mon as­sump­tion that home in­sur­ance will ad­e­quately pro­tect the land­lord against costs in­curred as a re­sult of dam­age to the prop­erty, but the re­al­ity is that the cover built into your home in­sur­ance is limited in scope and may not of­fer the best pro­tec­tion for your as­set.

“Un­for­tu­nately, many prop­erty in­vestors learn this the hard way.”

Ms East­man cited an ex­am­ple of how a land­lord’s fail­ure to se­cure spe­cialised land­lord in­sur­ance re­sulted in a costly ex­er­cise.

The prop­erty in ques­tion started out with con­sis­tent, good, long-term ten­ants who later be­gan to demon­strate un­ex­pected and dra­matic changes in their be­hav­iour.

“Across a two-year ten­ancy, they were model ten­ants but sud­denly started miss­ing pay­ments and then un­pre­dictably is­su­ing bulk, late pay­ments as well as fail­ing in­spec­tions,” Ms East­man said.

“Let­ters to the ten­ant and breach no­tices quickly be­came rou­tine and when they stopped pay­ing rent al­to­gether and were asked to va­cate, they re­fused, which re­sulted in bailiffs be­ing called in to change the locks and evict them.

“Ul­ti­mately, this whole sce­nario re­sulted in a sub­stan­tial loss in earn­ings for the land­lord and a clean-up bill to re­pair dam­age to the prop­erty.

“The land­lord’s home in­sur­ance pol­icy did not cover any dam­ages caused by the ten­ants’ chil­dren; all up the land­lord was faced with a $9000 bill, with only $613.20 cov­ered by their home in­sur­ance.”

Due to in­ci­dences such as this, Ms East­man said Jones Bal­lard Prop­erty Group have highly rec­om­mended all their clients take out land­lord in­sur­ance on top of what­ever in­clu­sions they al­ready have un­der their home in­sur­ance.

In most cases, land­lord in­sur­ance can be bro­ken down to cover three ma­jor com­po­nents: con­tents, which is dif­fer­ent to the ten­ant’s con­tents and of­ten in­cludes car­pets, light fit­tings, cur­tains and ap­pli­ances; loss of in­come; and dam­age to the build­ing.

“Like any form of in­sur­ance, there are many in­sur­ance poli­cies on the mar­ket and home­own­ers need to find the right pol­icy for their prop­erty,” Ms East­man said.

“For what is re­ally a min­i­mal out­lay of a few hun­dred dol­lars a year and gen­er­ally af­ford­able ex­cess, land­lords can be bet­ter equipped and bet­ter pro­tected to han­dle any­thing that comes their way.”

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