Risks must be cov­ered

Only about 20 per cent of land­lords have in­surance to pro­tect their prop­erty from dam­age, writes Sheradyn Holderhead.

The Advertiser - Real Estate - - House Hunter -

UNIN­SURED land­lords risk hav­ing to fork out thou­sands of dol­lars for dam­age to their prop­erty which is a sur­pris­ingly com­mon oc­cur­rence. Raine & Horne chief ex­ec­u­tive of­fi­cer Kevin Magee says there are two de­grees of pro­tec­tion for land­lords – hav­ing a prop­erty man­ager and tak­ing out a land­lord in­surance pol­icy.

‘‘There is great po­ten­tial for prop­erty dam­age by a ten­ant or a ten­ant’s friend to ex­ceed the prop­erty bond,’’ he says.

‘‘It’s be­yond my reck­on­ing for any­one to have an in­vest­ment and not have pro­tec­tion on it in the form of em­ploy­ing a prop­erty man­ager and land­lord in­surance.

‘‘Most peo­ple will in­sure their car but we are talk­ing about what is of­ten peo­ple’s most im­por­tant in­vest­ment out­side their fam­ily home.’’

Terri Scheer In­surance gen­eral man­ager Carolyn Ma­jda says the com­pany dis­cov­ered af­ter dis­cus­sions with real es­tate agents only about 20 per cent of land­lords have in­surance cover. ‘‘Many land­lords think ‘it will never hap­pen to me’ but un­for­tu­nately there are in­stances where ten­ants dam­age prop­erty or ab­scond with­out pay­ing their rent,’’ Ms Ma­jda says.

‘‘We have had ma­li­cious dam­age claims re­sult­ing from fire, bro­ken win­dows, holes in walls and doors, and even graf­fiti.

‘‘We also see cases where good ten­ants with the best in­ten­tions have ac­ci­den­tally dam­aged a prop­erty or suf­fered fi­nan­cial dif­fi­cul­ties that have im­pacted on their abil­ity to pay rent.’’

Ms Ma­jda warns stan­dard house and con­tents in­surance poli­cies will not cover land­lords in many sit­u­a­tions. ‘‘Land­lords can avoid these out-of-pocket costs by hav­ing ap­pro­pri­ate in­surance in place,’’ she says.

‘‘Unin­sured land­lords re­ally need to think about how they would man­age fi­nan­cially if they were faced with thou­sands of dol­lars worth of dam­age to their rental prop­erty.’’

Ian Berry In­surance prod­uct and mar­ket­ing ex­ec­u­tive man­ager Paul Mo­dra says land­lords also need pro­tec­tion from those un­likely but pos­si­ble risks, such as fire, light­ning and storm dam­age, fall­ing trees and un­fore­seen catas­tro­phes.

‘‘In which case . . . in­surance will also cover for loss of rent should your ten­ants be un­able to live in the home as a re­sult of dam­age caused by a de­fined event,’’ he says. ‘‘If your cash flow is tight and you heav­ily rely on the rental in­come gen­er­ated from your prop­erty each week, look for in­surance providers who will al­low you to take out op­tional cov­er­age against rent de­fault. Land­lords need to ques­tion how they can pro­tect a prop­erty they own but don’t live in . . . even with model ten­ants, there is no guar­an­tee they will take care of things to a high stan­dard.’’

PRO­TECTED: Prop­erty land­lord Ti­mothy Weight­man, one of the 20 per cent of land­lords who has in­sured his Noar­lunga Downs in­vest­ment.

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