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Insurance Part 2

Discussion in 'General Property Chat' started by Adele, 27th Feb, 2016.

  1. Adele

    Adele Well-Known Member

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    Hi All,

    Part 2 of my insurance saga. :(
    A few months ago, an IP had water leakage due to severe storm. Currently the claim for resultant damage for it has been lodged and is ongoing. There was structural defect (replacement of roof) that I had ended up paying for.

    Here comes part 2..... The tenant is now seeking a full month free rent calculated as discount on a few months rent, reason being loss of business days. I have explained that they should claim the amount for loss of business through insurance and the amount to be calculated by Insurance Assessor. I am trying to help in this process. Does anyone have any experience with claims for loss of business and how is it calculated?
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Have you got a link to part 1 to be able to follow?

    Was the tenant approved to operate a business from the property?

    In what ways did it actually affect them being able to live / operate there?
     
    Elives likes this.
  3. Adele

    Adele Well-Known Member

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    Part 1
    Insurance might not cover

    Yes the tenants are approved to run a business from the property, the loss of business days are due to water leakage close to electrical which caused loss of power for a few days.

    Another point they are claiming is for a discount as they did not use the 2nd level for a number of months. The property was inspected after the leak, and the person inspecting advised the tenants that the 2nd level is uninhabitable due to a defect (warp) in the wall. The PM disagrees with this as there are no cracks on the wall to suggest structural weakness. I am still in the process of confirming this from a different structural engineer, but now the tenant has decided that it is safe to use it right after we got the roof replaced and will be paying the full rent after this month. Nothing has been done to the wall. Tenants are withholding this month's rent as the discounted amount that they feel they are owed. I have been very patient with them so far, they have been continuously late with rent (4th month of 3 week arrears) Perhaps I am too patient? What is the best way to go about this?

    I have so far forwarded the tenant's request to the insurer, and requested tenants to pay the full rent while their claim is being processed. Another issue is if the amount from the insurance company does not match tenant's request, what happens then?
     
  4. Azazel

    Azazel Well-Known Member

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    Should the tenants have to claim from their own insurance? I'm not sure, but I wouldn't be pleased if it was me.
     
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  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    Lack of power for days and unable to access part of the home absolutely spells out rent compensation. You'd have to negotiate with them on how much - they can take you to tribunal and win very easily so best to negotiate well.

    Note this is completely separate to the loss of business issue as I've just been talking rent so far. They should talk to the claims dept of their biz insurer and ask what their requirements and procedures are.
     
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  6. Adele

    Adele Well-Known Member

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    Hi All,

    Thanks for the input

    Yes, I think everyone is unhappy with the situation. With the storm event that's been happening in Melbourne, I know I won't be the only person experiencing the same thing. The key is to find the balance that is fair to both parties and not only favouring 1.

    The problem is that they have bundled both issues ( rent comp and loss of business together ) instead of 2 separate issues.

    What would be the common calculation method for rent compensation? Are there any standard formulas for this. At the moment it seems like the asking figure from the tenants POV to be exorbitant. As this is a commercial property, 1 months rent is upwards of 10K. This amount added with recent repairs that I have recently paid for really hurts the pocket.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Adele, the lease should address the issue of rent abatement due to damage sustained to the premises - they probably have the right to terminate the lease, it will also have a rent abatement clause as well. READ IT or have your PM read it before the tenant terminates.

    Daily rent is 1/365 of the annual rent. Note that abatement may include outgoings abatement.

    Compensation is not covered by the lease as it is too wide. Address what the tenant is strictly entitled to and anything else address to your insurance broker.
     
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  8. Adele

    Adele Well-Known Member

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    Thank you @Scott No Mates

    I have been going through the lease contract (as well as insurance contract) numerous times but have not noticed this clause. I will certainly look for this particular one now, this is really helpful.

    It is a lot of issues piling up one on top of another, unfortunately there is a lack of communication between me and PM. I am trying to take control of the situation now as it is getting out of hand. I certainly want to find the fair medium for the tenant and myself, the lack of experience from my part leads me to asking from more experienced PCers. I do not want to be lead by my own emotions and lead to an unfair situation which is unfair to the tenant.
     
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  9. melbournian

    melbournian Well-Known Member

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    How's ur claim going ? I've had my rejected and then debated with the ombudsman and then now approved but wanting to ask more in terms of accomodation.
     
  10. Adele

    Adele Well-Known Member

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    @melbournian

    1st part (claim for damage) is being re-assessed. The PM lodged the claim late (almost 20 days after incident) and as the premise was undergoing a fit out, part of the damage was already fixed when the insurance assessor came to do the inspection. This resulted in differing amount between quoted works to the assessor' figures. Big headache there.

    2nd part (tenant's request for rent compensation). I just decided to go ahead and give it to them, and claim a loss of rent from insurance. I just wanted to save the tenant and myself the stress. I have not lodged it yet as I am still dealing with more repairs.