27 Jan 17
Let’s talk about insurance, an area that we believe is not always done as well as it should be. Insurers and policies do vary quite a lot but at first glance, appears to be the same. Importantly, are you paying too much but not properly covered?
Public liability (usually $20 million) is there for instances where a third party is making a personal injury claim when at your property or in the case of body corporate, in the common areas.
This insurance is included in home and landlord insurance. With units the common areas are covered by the body corporate insurance but if you have exclusive use areas then you should check with the body corporate whether this is covered under their insurance. We are concerned that some unit owners are incorrectly assuming they are covered under the body corporate insurance for their unit.
Building insurance has to be taken out when the property is not part of a body corporate. In the case of ‘home’ insurance (as opposed to ‘landlord’ insurance), the insurer must be advised that the property is being rented. ‘Landlord’ insurance may cover damage to the building by tenants.
With ‘home’ insurance, the insurer must be advised if the property is being rented understanding that contents are usually not covered as a result of damage by the tenants. ‘Landlord’ insurance may cover damage to the contents by tenants. There is a degree of uncertainty what is building vs. contents. For example, carpets, curtains & blinds are usually considered to be contents but not always. You should check.
Loss of Rent resulting from Building Damage
This covers loss of rent when the building has been damaged by fire, flood and a series of other tragic events, even earthquake. Policies can vary a lot over what is defined as an insurable event.
In the case of units, this is usually covered by the body corporate. In the case of houses, it may be covered under the building policy.
Some insurers will make representations that they are offering ‘landlord’ insurance when all they are offering is loss of rent due to the property being unrentable.
Loss of Rent and Damage resulting from Tenant Delinquency
This cover is offered by dedicated ‘landlord’ insurers. It is important to note however, that cover can be provided only if the offending tenant has been up to date with their rent after cover has been commenced. That is, it is not possible to take such insurance out after the tenant has gone ‘bad’.
Typical cover includes loss of rent from (absconding, failure to vacate, tenant hardship, death), damage, reletting expenses, change of locks, removal of goods, legal costs with one insurer throwing in cover for ATO audit costs.
This type of comprehensive insurance is quite competitive but the cover on offer can vary considerably. For example, cover may be restricted to damage by the tenants themselves but not guests or pets. We have had a case where the insurer refused a claim because the damage was done by a child of the tenant. Our experience is that ‘dedicated’ landlord insurance is usually better than insurers who offer ‘add-on’ cover.
What to do if you want to know more?
Please call Danielle on 0418 383 950 or email firstname.lastname@example.org.