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