Landlord insurance

No excess

 

How do EBM go if you make a claim just after you took out the policy? I took out LL insurance with them recently because a tenant was going a bit flaky falling behind on rent and then catching up again this started late last year, at the time I took out the policy my creature tenant was one week behind. Since then they have fallen 6 weeks behind. Am I likely to get a pay out or will they wiggle out of it? Im in the process now of getting them evicted.

 

Not specifically ebm but most policies are void if started when tenant was already in arrears.

Arrears can mean one day off for some policies so be careful.

The best time to begin a policy is at the beginning of a new tenancy when 2 weeks rent has just been paid up front and there is no record of arrears.

If you make a claim after that 2 weeks then all good.

 

Thanks Xenia, we'll see what happens. This is why I am generally not a fan of LL insurance. The tenant has been in there 2.5 years and only started going flaky the last 6 months. If I had LL insurance the whole time I would barely be ahead once you factor in the bond.

I worked out once it was going to cost me around 3k a year to have LL insurance on everything I own so wasn't worth the outlay for rent arrears alone. I have been a LL for 12 years and only lost $1000 in that time due to default. LL insurance would have cost many multiples of that over that time.

 

There is no excess on a loss of rent claim.

 

Doesn't really make sense to have one either. Did a 6 week rent claim for someone recently, if excess ate into that he'd be out of pocket even further.

 

This isn't a case of "wiggling out of it", when cover is applied for there are seven dot points on the application form whether done online or hard copy that you must agree to, right where you sign/agree to terms. The first two state:

• There is no existing problem which has already occurred or is currently occurring (RentCoverUltra or RentCoverPlatinum will not cover claims for problems which have already commenced)
• The rent is currently up-to-date

The fifth dot point says:

• I have a duty of disclosure, which means that I need to tell EBM any information that may alter the underwriter decision to place cover on my property

It would appear that in your case there 1) was an existing problem 2) the rent was not up to date 3) you haven't disclosed information that may alter the underwriter decision to place cover

These by the way represent very lenient conditions, some policies require the tenant to not be in arrears at any time during the preceding 2 months of taking cover.

You've stated that "I took out LL insurance with them recently because a tenant was going a bit flaky falling behind on rent"

So this means that while you believed the tenant didn't represent a risk to you you didn't take out insurance, and instead only took it out once the tenant was "going a bit flaky falling behind on rent", so you felt you were at a heightened risk.

Insurance cannot work like that. Premiums are based on an accepted risk across a wide range of properties, not only those that are at imminent risk. For example, it's not acceptable for people in bushfire areas to only take insurance when a bushfire is roaring up the gully behind them. This would completely distort the risk analysis and would mean that premiums would have to go through the roof, and in turn nobody would insure.

 

This is simply the nature of risk management, making a decision as to whether to insure or not. Landlord insurance is about far more than rent loss. Depending on the policy they include other risks such as malicious and accidental damage, theft by the tenant, and many others, that are simply not covered under defined risks policies. These claims can quite easily amount to tens of thousands of dollars. In fact we've had a drug lab claim that was in excess of $40,000 to rectify. So whether it be landlord insurance, car insurance, health insurance, life insurance, or any other type of insurance, the aim is not to make a profit from it but to protect against the unexpected. The risk is spread among a lot of people so that everyone pays a little to assist the person that would otherwise lose a lot.

There is a book written by Dr Alan Manning called "What's insurance?" designed to explain the basics of insurance to children and it's brilliant. One section explains it like this:

"5000 years ago, in ancient China, farmers would travel by raft to the big towns on the coast to sell the crops they had grown on their farms. The problem was that out of every 100 rafts that set sail each year, 2 or 3 rafts were lost in the rapids. This meant that 98 farmers were rich and 2 lost everything and were poor.

Rather than put all their harvest on a single raft and risk losing everything....the farmers agreed to put one bag of rice or fruit on each of the 100 rafts. So when a few rafts were lost, it was only a small loss to all the farmers, not a big loss to one or two farmers.

This is what insurance is all about: Spreading the risk."

 

Yia Sou Mr Biz

That's an excellent track record for sure and your descision to not have landlords insurance is by no means unreasonable.

I've seen lots of multi property landlords make that exact descision and for that exact reason.

$3000 is 10 properties so the risk is spread out due to the multiple properties.

However I would always recommend my clients have landlords insurance even with multiple properties as all you need is one claim in one property to pay off the premium for all of them.

Landlords insurance pays more than just arrears, also tenant accidental and malicious damage, pet damage, damage caused by jealous ex boyfriends lol...

Most claims we put through are rent default - the chance of even responsible tenants facing some financial difficulty during the term of their lease is high and sometimes the most unlikely tenants will stop paying rent due to job loss, divorce, sickness, job transfers interstate etc...

It's good practice to not put yourself at the effect of any of that and know that your cashflow will be uninterrupted irrespective of other people's life circumstances.

Also specialist insurance companies like ebm do not discount the claim down by factoring in the bond (the bad policies do this), so they will pay out all of your arrears claim and the bond will be used for cleaning, damage etc.

When people are evicted due to arrears, the last thing they think about is cleaning the property - they just go

 

Cool.

Do I get a refund if I cancel the policy?

 

I have had 2 claims in the past with your company. I was unimpressed both times. Over the past year I have been in the process of cancelling all my policies with EBM. This LL policy is the last to go. Now I just go with the cheapies and cover the building.

 

What went wrong with it, may I ask?

A lot of my clients (and myself) are with EBM and when claiming they give a good check list of all the gear required to push the claims through and have been very quick to send a cheque out when all the information is present.

 

Two storm damage claims. Trades advised best cause of action but EBM disagreed. On one it was advised to remove an item that was the source of the leak. EBM were happy to cover the damage from the leak but not the removal of the item which was damage in the storm causing the leak. Second one was a tree branch that fell and caused damage, they were happy to pay for the removal of the branch but not the tree that was now structurally damaged and dangerous as advised by the tree lopper.

In the end you pay a premium over a lot the budget guys but get no better service or support with claims IMO.

Wiggle wiggle wiggle... IT"S WIGGLE TIME!



I suppose EBM can be the red wiggle.

 

Yes, policies can be cancelled at any time for a refund

 

I think I had promised to add this when I had it, sorry for the delay. This link applies the discount automatically as a PropertyChat member. Remember the discount applies to the first 12 months only for new policies, then reverts to standard.

PropertyChat members RentCover landlord insurance link.

 

I've just reviewed and compared between Allianz, Terri and Apia - I'm going to go with Apia - good cover, good premium (Qld).

 

Was EBM not among your shortlist?
How many weeks of rent cover do Apia have, how much excess, etc?

 

I've in fact never heard of EBM. Apia's excesses were similar to Allianz and Terri and overall packaged really well.

 

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I'm currently overseas with limited internet access, just thought it worth mentioning that although the Apia policy is relatively okay from what I have seen, the area it still falls down badly is that you are not covered for Accidental Damage. The cover for Malicious Damage is where you will need to prove that a tenant caused the damage with "malicious intent" - this is a failing of many policies unfortunately and can eliminate as many as 60-70% of damage claims. This may mean a lower premium (certainly not always) but can come at great cost should damage occur that is not classed as malicious. Many of these policies simply miss when it comes to the real industry specific risks.