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Shield Insurance Brokers – Delivering peace of mind to residential investment property owners!6 May 2016

There are many great benefits to being a residential investment property owner, and there are also a great many risks.

Economic and market conditions, legislative and tax law compliance, natural perils and the quality of your tenant (will they service their rental obligations and look after the property in a reasonable way?) A lot can and does go wrong.

Some of these risks cannot be transferred to an insurer, but a lot can be via a good insurance policy issued via a good insurance broker. Many landlords understand the importance of engaging a property manager, and a good manager forms part of your risk management protective shield. As does a good insurance broker!

In the event of an insurance claim to do with investment property damage, it’s important to note that most claims ultimately get paid, but not always does the landlord achieve the best financial result.

Recently we settled a claim for our clients Matt and Charmaine where their tenant defaulted on rent, left the property in poor state (literally tonnes of rubbish) and damaged the property. As their insurance brokers, our technical input shifted the insurance company’s offer from about $10,000 to a final settlement of around $30,000.

The original offer was based on the misinterpretations of a claims administrator. The insurer offer was based on incorrect interpretations and assessments of “loss of rent” and by trying to apply the standard policy exclusion of “Wear and tear, tenant neglect, poor housekeeping and unhygienic living habits”. In this case, there were real instances of malicious damage (including slashes in the carpet and damage to air-conditioning control panels) which we had to argue was not part of the general neglect exclusion clause.

In the end, we managed over 60 pieces of correspondence with all parties to get this right for our client. This is the unseen work you entrust to your broker.

When looking for good investment property insurance cover, the policy benefits should include:

  • Malicious and tenant damage cover
  • Accidental loss or damage cover for all property (not just glass)
  • Automatic cover for landlord’s contents (things like window dressings and carpets)
  • Loss of rent for 24 months (12 is often not long enough to replace a property rendered unlettable)
  • Rent default cover, not limited by time (60 or 90 days is not enough to remove a tenant in default)

Two final tips for risk management when it comes to your residential investment property:

  • Engage a good property manager, or be vigilant in tenant selection.  Things like general grubbiness or pet damage cannot be insured, so screen any prospective tenants well at the outset, then monitor the property actively.
  • Engage a good insurance broker. Impartial and technically proficient insurance management will make a big difference at claim time.

If you would like more information about how to adequately protect your investment property and enjoy peace-of-mind, please just book a time to speak with one of our risk experts – full details available via our CONTACTS page.

 

 

 

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