A rise in savvy tenants and hidden drug laboratories has placed increased importance on PMs to educate landlords on insurance.
EBM RentCover executive general manager Sharon Fox-Slater told Residential Property Manager concealed drug laboratories have become a bigger issue in recent years.
“Last year RentCover received 15 claims for costs associated with cleaning up after backyard drug laboratories – leading to a forensic clean-up bill of more than $350,000 for the year, or an average of more than $23,000 per property,” Ms Fox-Slater said.
“The other emerging trend is the rise of the ‘savvy’ tenant who knows their rights and how to work every loophole in the system to prolong the eviction process, or to get compensation if a property is not up to scratch.”
Ms Fox-Slater said the way to prevent problems is through careful tenant selection, good record-keeping and a proactive approach to maintenance and chasing arrears.
However, she said some PMs can feel it is too risky to talk to landlords about insurance.
She said the fear is “misguided” and having the discussion shows the property manager cares about protecting a landlord’s largest asset.
“There’s nothing dangerous about asking landlords whether they have landlord insurance and, if not, whether they had considered it and how they would cope with an incident of major tenant damage or default, or worse, a lawsuit.
“Property managers play a vital role in educating investors about the existence and benefits of quality landlord insurance.”
Ms Fox-Slater said landlords rarely respond well to blows to their hip pocket.
“If your landlord is uninsured or has sub-standard insurance and something goes wrong, then there’s a real risk that you will lose their business,” she said.
Ms Fox-Slater said the problem is some agencies have too many inexperienced PMs.
“Training on landlord insurance should be part of the induction process for every new PM.
“In addition, it is beneficial to have a written question about landlord insurance on the management authority form you ask your investors to sign.”