Did you know that if you own a rental or investment property you may need a different insurance solution to your normal home and contents policies?
And renters/tenants – did you know that your home and contents are not likely to be covered by your landlord’s insurance solution?
If the answer is no to either of these questions, read on and make sure you have a chat to your insurance broker about your situation to ensure you don’t have gaps in your insurance solution.
Landlord’s insurance and risk management
It’s worth reviewing your landlord’s insurance solution for your rental property regularly, as well as doing some risk mitigation to protect your investment. For example, many people think that tenants who leave a mess or don’t pay their rent would be the biggest cost burden on landlords, but the reality is that it’s water damage that is a far costlier problem. Defaults on payments and theft DO play a part in your risks, though, accounting for 22% of claims.
There are a number of things you can do to manage these risks. If your concerns are about tenants, doing a thorough selection process including reference checks (perhaps using a trusted agent) can help you get great tenants in the first place. And while we can’t control the weather, we can keep on top of property care and maintenance to reduce the risk of things like water damage occurring in the first place. It can even be simple things like keeping gutters clean and replacing old flexi hoses. In fact, according to the Insurance Council of Australia, more than 30,000 claims for water damage in the last year were due to failure of the braided flexible hoses (usually found under your kitchen sink) which cost insurers an estimated $320 million.
Emerging risk for landlords
Unfortunately, there’s an emerging threat to landlords that we have experienced, and that is contamination through methamphetamine labs and meth smokers inside the property. Clean up is expensive, and on top of that, once the property has been tested and is positive to meth contamination it can not be re-let until it is professionally decontaminated and certified that it’s clear and safe for new tenants. Thankfully in a recent claim we were able to get it paid under malicious damage. Apparently 1 in 4 South Australian homes now contain meth residue which is a shocking increase. We are watching this closely as we anticipate a response from insurers as claims increase.
Changes to tenancy laws
As an insurance broker, it’s part of our responsibility to stay across changes that may impact our clients and their insurance and risk management solution. One change that we’ve seen come into effect in some jurisdictions is important for both landlords and tenants to be aware of, and that’s a change to the law to allow victims of domestic violence to end their tenancy immediately and without penalty. We will work to keep across any enhancements or changes to insurance solutions due to reforms like these.
Renter’s and tenant’s insurance
As a renter, the owner of the property you’re inhabiting (your landlord) is responsible for damage or loss to the building and fittings, but you are responsible for your own possessions – such as your clothes, furniture, electrical goods, books and other valuable belongings (source: Understand Insurance).
We’ve seen too often when an incident or disaster occurs, it’s the tenant who is the most impacted and, if you aren’t appropriately insured, you’re also the one left in the lurch without compensation.
Renter’s insurance is designed to prevent this, offering protection against financial loss from things like fire, burglary and even accidental loss or damage. It could also cover you for accidental damage to the fixtures and fittings of the home you’re renting or provide financial cover for legal liability.
How much should you insure your home and contents for? Well, here’s a calculator you could use to help you come to a more accurate estimate. We find too often that people underestimate how much it would cost to replace their belongings, and they end up being underinsured.
Get a quote for your landlord’s insurance or renter’s insurance
Managed Insurance Solutions would be pleased to talk to you about your unique situation, review your current insurance programme and provide you with a free quote. At the very least, with expert advice you’ll have peace of mind that you’ve got a competitive solution in place. Click here to contact us!