Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

rpm logo latest

A dozen landlord insurance pitfalls

By Sharon Fox-Slater
23 April 2014 | 1 minute read

sharon 2Unsuspecting property investors can be left out of pocket by thousands if they fall victim to any one of a dozen common insurance pitfalls.

 

 

Advertisement
Advertisement

Blogger: Sharon Fox-Slater, general manager at RentCover

The simple fact that not all insurance is the same makes it extremely difficult to weigh up the benefits of one policy versus another.

Landlords often spend more time choosing a flat screen TV than insurance for a rental property worth hundreds of thousands of dollars. Often the glossiest brochure or cheapest price wins out and the landlord is left exposed.

It’s just as important to work out what isn’t covered as what is.

Some policies won’t pay out on claims when a fire is deliberately started by a tenant, if the property is on a month-to-month lease or accidentally damaged by a tenant.

Other issues to consider include the company’s reputation – what do their customers who have had to make claims have to say about them?

Some property managers perceive it as “risky” to get involved in discussions around landlord insurance which is, in my view, misguided. Failing to alert landlords to the need for cover can leave not only them but you and your company exposed.

It can be uncomfortable having the tough conversation with clients but, remember, they will be the first to thank you if disaster strikes and they find themselves protected because of your care and good advice.

One resource you might choose to refer to is an e-book – 12 Most Common Pitfalls When Insuring Your Rental Property – penned by my colleague Brett Clarke who, like me, has been in the landlord insurance industry for more than 20 years. (See the RentCover website if you’d like to download it.)

Naturally, he favours RentCover, but the e-book can help landlords differentiate effective from inadequate insurance policies, regardless of which product or firm they end up choosing.

There’s more detail in the e-book but, in brief, the pitfalls are:

1 Buying on price alone — look for “value” not “cheap”.

2 Deliberate fire by tenants — some policies exclude this.

3 Excess — how much, and can the bond be used as payment?

4 Underinsurance — insuring for less than true replacement value.

5 Malicious damage by the tenant — is it covered?

6 Accidental damage — some insurers limit cover to the contents not the building.

7 Check the qualifying (or disqualifying rules) — beware the fine print.

8 Check for complete cover — some combined house and landlord policies offer less cover than specialist landlord policies.

9 Court orders — do you need a court order to claim for rent default?

10 The belief that the body corporate already insures the landlord’s property — not for liability if someone hurts themselves inside.

11 Periodic tenancies or lease continuation — some won’t pay out for claims if the written lease has expired.

12 When landlords figure out they “don’t need insurance” — a reliable tenant and a good property manager is not enough to protect you, as accidents can happen to even the most reliable and carefully supervised tenant.


About Sharon Fox-Slater
sharon 1Sharon Fox-Slater is the general manager of RentCover, a division of EBM Insurance Brokers, which insures 120,000 investment properties around Australia. With 20 years’ experience in landlord insurance, Sharon’s top priority is customer service and positive customer comments are her biggest marker of success. Despite leaving school at 15, Sharon has forged a ground-breaking career – she was the first woman to become a fellow of the National Insurance Brokers Association. Sharon was recently honoured to have been included in Insurance Business magazine’s Elite Brokers 2013 list.

A dozen landlord insurance pitfalls
default
lawyersweekly logo

ABOUT THE AUTHOR


Sharon Fox-Slater

Sharon Fox-Slater

Sharon Fox-Slater is the Managing Director of EBM RentCover, which protects more than 150,000 rental properties across Australia. She commenced a role with EBM back in 1993 and was part of the core team that helped launch one of Australia’s first landlord insurance policies into the market. She was also the first woman in Australia to complete the Advanced Diploma in Insurance Broking, and is well equipped to educate property investors and property professionals about the value of aligning with a specialist landlord insurance provider.

Listen to other installment of the Real Estate Business Podcast
Do you have an industry update?

top suburbs

12 month growth
Travancore
49.78%
Timboon
49.57%
Dolphin Point
49.51%
Nyah West
49.42%
Preston Beach
49.29%
Newington
48.97%
Killcare Heights
48.89%
Wundowie
48.77%
Homebush
48.44%
Glenside
48.28%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.