landlord insurance, help!

Just need some help from all the investors here...as I'm confused when I'm trying to get quote online.

my IP is a unit in NSW, I'm renting it out to tenants as unfurnished. When I checked it online, most insurer says their landlord insurance doesn't include strata titles.

If it's unfurnished, then I guess I don't need contents insurance, right?

I only want rent loss and malicious damage by tenants. if the internal interior (say floorboard, ceiling paint) is damaged by tenants, is it covered in malicious damage?

from what I read, contents insurance is more for furniture or electronic stuff, not for internal fixtures.

Which insurer is better? has anyone insured with CBA? I get discount while having a loan with them, but not sure if CBA is specialized in this kind of insurance.

any advice would be great help! Thank you

 

The majority of Strata properties would require contents insurance to cover the kitchen, bathroom, light fittings, floor and window coverings.

You need to understand exactly what is your responsibility and what Strata covers.

 

It depends on what contents are covered by strata insurance and rest needs to be covered by LL.....I am in process of looking for the same as currently investigating between AAMI (with tenant protection) & Terri Scheer. Refer to AAMI website about LL contents insurance..

Also, keep in my mind that you may also require public liability as part of LL insurance....Terri Scheer is specialised LL insurance provider but expensive than AAMI....As always key is to know what you want and cover your self....

 

You need probably contents, if you want to protect blinds, carpets, floating floors etc, and tenant related issues, no building.

 

Landlord insurance covers contents which include fixed assets, as well as public liabilty. They just do not cover building insurance as the building is common property and you cannot insure it directly.

 

As has been mentioned landlord insurance for a strata titled property should include cover for tenant-risks such as loss of rent, malicious damage by tenants, accidental damage, theft by tenants and liability, as well as numerous more specific risks such as legal expenses whilst minimising a claim, tax audit etc. It should also include cover for the landlords contents (carpets, curtains, blinds, light fittings etc.) against not only the tenant'related risks but also defined risks such as fire, storm, water damage etc.

The Body Corporate/Owners Corporation insurance (Strata Building policy) will generally cover the building structure as well as common areas such as stairways (external to your unit), grounds, driveways, etc.

The specialised insurance providers have products to specifically cover this inclusive of many risks not covered by some of the major direct insurers.

Feel free to let me know if you have any further questions.

 

Brett, rather than opening the can of worms....May I ask wat are the key difference between EBM's 'RentCover Ultra' & 'Terri Scheer's Landlord Preferred policy' keeping strata unit in mind which is on signed lease, apart from excess....I understand you can't advise on Terri Scheer's products but surely someone must have asked you this....

 

Yes I am using Comminsure while the bank I'm with is Bankwest.
So far they are the cheapest in my QLD property compare to Allianz.

 

Hi S0805

This does indeed come up from time to time and is always a difficult one to answer as what is seen as an advantage to one person (a risk they care strongly about) may be insignificant to another. In my opinion with these two products you are referring to the two best products on the market, specialised policies (not pumped up household policies that you may find from the banks or major direct Insurers for example). Both include more specialised features that have evolved over time due to their close association with the property management industry, things such as 'tenant hardship', 'death of a tenant' and 'cover whilst on a periodic tenancy'.

If you were to get into a feature for feature comparison you will find relatively small differences, each will have the odd advantage or disadvantage. To be honest though in regard specifically to the cover there is not major differences in what a claim is likely to end up as. In my opinion.

Where I believe the major difference is gets down to the area of claims. EBM have "claim settling authority" on behalf of the Insurer which means that internally we can settle claims up to $50,000 without reference to the Insurer. The main advantage of this we believe is in the claim process, and in particular how long it is likely to take to settle. Most RentCover claims are settled within 5 working days, many settled in even far less. On the other hand TS (which was once a broker) is a division of a major Insurer so you tend to lose some of those advantages.

At the end of the day all the 'features' of an insurance policy mean nothing until you make a claim, that's where you find out how good it is, and where we believe EBM is the "most different" of the landlord insurance providers.

You're at least well on the right track looking at the specialised policies, from experience when it comes to claim for the weird and wonderful situations that occur with tenants, they generally provide substantially better cover overall.

I hope this helps.

 

You also need to understand what 'malicious damage' means... It can be difficult to get things claimed as malicious in regards to insurance. My understanding (from other people's experiences) is you need to have something like a police report.... (i.e. a friend/relative/stranger of the tenant was breaking into the property and broke something, drug den, etc)

Otherwise it would come under accidental damage...

 

Hi S0805, thanks for the notes, it's just a strata unit I'm doing, I actually compared the quote from AAMI and TS, they are pretty much the same, I mean with AAMI, after the initial filling in, it came out with $250 ish which seems to be a lot cheaper, but then after ticking Rent cover, it becomes $355 pa..which is the same as TS and EBM really....(less than $10 difference amongst them)...say insure for the same amount $50,000 liability...from reading PDS roughly, i think TS charge less excess here....

 

The area of Malicious Damage vs Accidental Damage is in itself a whole can of worms. I have devoted whole articles and spoken at conventions on the subject and maintain it is the very first thing you need to check when comparing policies, as the vast majority of damage claims are classed as 'accidental damage', or at the very least 'deliberate and intentional', not 'malicious'.

I know of stacks of examples of this, some seem ridiculous but it gets down to the legal definition of 'malicious' which makes including accidental damage so important.

Most 'landlord' policies will cover malicious damage by the tenant but not accidental damage, or even what some policies term deliberate damage. Malicious Damage requires you to prove that the tenant did it with 'malicious intent', meaning that the reason they were doing the damage was in fact to damage the property.

So in the case of red wine spilled on carpet at a party, oil stains on carpet because of a motorbike being repaired in the lounge room, or in fact damage caused by a child under 12 (we had one which cost over $10,000 years ago and a child of this age is not deemed as causing damage 'maliciously') - these are accidental damage. The bottom line is that if you can't get a police report number for the damage it more than likely will not be classed as being done maliciously, and therefore excluded under many policies.

And just on 'drug dens' - most likely accidental damage, the intent was to produce great drugs, not to damage the property. Yet in the case of a drug labe there could be a clean up bill to the tune of tens of thousands of dollars.

I could go on with countless examples on MD vs AD and the trap it creates.

 

I haven't looked at an AAMI policy for some time but last time I did they were very similar to most of the major direct insurers and had some failings in areas such as not paying the first 4 weeks rent in a default situation, no cover for Accidental Damage, and lacking in some of the specific risk areas such as tenant hardship, tax audit etc. which are often only included in the specialist policies. So unless there has been some significant change you just need to be aware of the risks you are not covered for.

 

You are right here Brett....but the way I understood is EBM & TS both use bond money in default anyway (which could be equivalent to 4 weeks). I accept your point on Accidental damage though....

 

Thanks Brett, I end up having insurance with EBM (Rent Cover Ultra).

 

What you're referring to with EBM and TS works quite differently. With both companies, the bond (4 weeks) should be used for things that you cannot claim, such as clean up, minor damage etc. Any money left over from the bond can then go towards lost rent before you claim what you can't cover, but you then simply claim your loss of rent. If your bond was exhausted you would still be claiming your loss of rent.

The AAMI policy does it very differently. They DO NOT pay the first 4 weeks rent, PLUS they deduct an excess as well. So lets say you had a situation where your bond was exhausted through clean up and minor damage. They would not pay the first 4 weeks rent loss AND would also deduct an excess. Therefore if there was say only 6 weeks rent loss to start with, you would only be eligible to get 2 weeks paid LESS your excess.

 

Tricky....so much information hidden in fine print. Brett, I am glad I've selected EBM (Rent cover) for my IP....thanks for your input.