When Covid was responsible for a deluge of rent-related insurance claims, 78 per cent of Australian insurers responded by withdrawing from selling landlord insurance policies altogether.<\/p>\n
The claims, coupled with state and territory governments announcing nationwide rental relief via an eviction moratorium, changed the landlord insurance landscape, possibly forever.<\/p>\n
It has also made the task of securing insurance for investment property tenancy more fraught than ever before.<\/p>\n
Canstar Landlords Insurance expert Steve Mickenbecker said insurers did allow existing policies to continue but stopped selling new policies, while most also declined to renew existing policies.<\/p>\n
\u201cThe market was absolutely decimated in that period and landlords that didn\u2019t have insurance\u00a0had trouble getting reasonable cover – their shopping list was much reduced,\u201d he told Australian Property Investor Magazine<\/em>.<\/p>\n Of the 22 per cent of insurers who did stay in the market, just 10 per cent of them continued to cover loss of rent, according to Canstar research.<\/p>\n Bold claims, fine print<\/strong><\/p>\n Today, landlords are strongly encouraged to pay close attention not just to inclusions but exclusions as well, especially to the mainstays of landlord\u2019s insurance – loss of rent and damage or theft by tenants.<\/p>\n These essential items may only be options in a policy, and in the last 12 months some rental default cover policies have also changed their claim limits.<\/p>\n \u201cThat is, increasing or decreasing the number of weeks of rent to be paid and\/or the dollar amount,\u201d Mr Mickenbecker said.<\/p>\n \u201cYou\u2019ve got to look at how much you\u2019re covered for, what dollar limit, what expenses will the policy actually pay.\u201d<\/p>\n EBM RentCover managing director Sharon Fox-Slater added that landlords could benefit from having cover that extended to legal expenses.<\/p>\n \u201cIf something does go wrong, there can be lengthy and costly legal disputes.\u00a0<\/p>\n \u201cWhen a tenant does the wrong thing,\u00a0the matter\u00a0may need to go to court to sort out disagreements.\u201d<\/p>\n Around half the claims\u00a0we\u00a0receive concern tenant-related such as loss of rent, damage and theft by the tenant.<\/span><\/p><\/blockquote>\n – Steve Mickenbecker, Canstar Landlords Insurance expert\u00a0<\/span><\/p>\n The bond, for example, is not enough to cover tenant related risk.<\/p>\n \u201cThis is a common mistake, as in many cases the bond will not be enough to cover expenses if a tenant refuses to pay rent, damages the rental property and fails to make good on their obligation to repair the damage, or steals contents from the premises,\u201d Ms Fox-Slater said.<\/p>\n This leaves the landlord to foot the bill and then chase the tenant for reimbursement through the courts, which can be an expensive proposition.\u201d<\/p>\n A key feature of landlord insurance policies is legal liability (also known as \u2018public liability\u2019 or \u2018liability to others\u2019) and cover limits are usually in the tens of millions of dollars.<\/p>\n \u201cLandlords have a responsibility to provide a safe and liveable property for tenants and anyone else who visits the premises, which means they must take care to avoid foreseeable harm to tenants or other visitors.<\/p>\n EBM RentCover’s Sharon Fox Slaters<\/p>\n<\/div>\n \u201cHarm could be a physical injury or damage to the person\u2019s property.<\/p>\n \u201cIf the landlord is negligent in this responsibility and someone suffers a loss as a result, the landlord will usually be held liable and may be required to pay compensation,\u201d she said.<\/p>\n \u201cWithout insurance, the landlord has no cover for liability incidents that occur at the rental and would face any legal and compensation bills on their own.\u00a0<\/p>\n \u201cFood for thought: to date, the highest personal injury claim in Australia for one person was an eye-watering $19 million and half of that was legal costs,\u201d Ms Fox-Slater said.<\/p>\n It is what Mr Mickenbecker describes as life-changing and why closely reading policies and correspondence sent by the insurance company is essential.<\/p>\n \u201cClaim rates are not high but the payout is massive if a terrible event occurs and life-changing if you don\u2019t have insurance cover it.<\/p>\n \u201cOne of the most common mistakes landlords make is they don\u2019t read a policy until something\u2019s gone wrong.<\/p>\n \u201cFrom my own personal experience, I was living between neighbours, both of whom were watching the flood waters come up in Brisbane, and it was only then they thought, \u2018oh we\u2019d better read the insurance policy\u2019, only to find out it didn\u2019t cover riverine flood, it only covered storm water flood.<\/p>\n \u201cPeople too often don\u2019t read or understand what\u2019s in their policy.<\/p>\n \u201cEvery time your insurance company writes to you should look at what changes, if any, have come – you don\u2019t want to find out at claim time, you want to find out up front,\u201d he said.<\/p>\n That is also true of the moment a property settles.<\/p>\n \u201cThere are many misconceptions about landlord insurance and confusing information about when the policy should be placed,\u201d Ms Fox-Slater said.<\/p>\n \u201cThe minute you enter into a contract of sale, you have an insurable interest in the property and cover should be taken out straight away.<\/p>\n \u201cIf managed correctly, an investment property can prove to be a financial dream, however, renting out a property comes with a range of risks.<\/p>\n \u201cWithout the right insurance in place, that financial dream can quickly turn into a financial nightmare.<\/p>\n \u201cYou cannot control a tenant\u2019s job loss, a relationship breakdown, or their health.<\/p>\n Canstar’s Steve Mickenbecker<\/p>\n<\/div>\n \u201cAround half the claims\u00a0we\u00a0receive against landlord insurance policies concern tenant-related such as loss of rent, damage and theft by the tenant, and investors who have landlord insurance will usually be protected for these risks.\u201d<\/p>\n As a starting point, Canstar run a national and state award system for insurers who perform well across the board.<\/p>\n \u201cWhen you take out a policy you\u2019ve got to your homework and get prepared,\u201d Mr Mickenbecker said.<\/p>\n \u201cGet a quote specific for your property as well.<\/p>\n \u201cA good starting point is to look at Canstar\u2019s national award winners and the five-star products and use that as your starting point.\u201d<\/p>\n The bottom line for a landlord, Ms Fox-Slater said, is the importance of protecting\u00a0your\u00a0asset and the income\u00a0that is\u00a0derived.<\/p>\n \u201cA specialist landlord insurance policy is an important part of an investment strategy,\u201d she said.<\/p>\n<\/p><\/div>\n![\"Sharon](\"https:\/\/www.apimagazine.com.au\/media\/misc\/ebm-RentCover-Sharon-Fox-Slater.jpg\")
<\/p>\n![\"Canstar,](\"https:\/\/www.apimagazine.com.au\/media\/misc\/Canstar_Steve-Mickenbecker.jpg\")
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