Paying the contents insurance excess for the tenant

Discussion in 'Property Management' started by Ceejay, 11th Feb, 2020.

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  1. Ceejay

    Ceejay New Member

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    Hi everyone

    A 'what would you do' question.

    Our rental required an urgent repair to the electrical system which had failed, causing the power to go off. It occured because water had gotten inside the cables (or something similar). There is no issue with us paying the repairs, however the tenant lost their frozen food and want to submit an insurance claim. They have asked us to go halves in the cost of the $300 excess.

    Is this something you would agree to? They have been good tenants so far
     
  2. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    How long was the power out for?
     
  3. datto

    datto Well-Known Member

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    I think you're lucky the tenant doesn't hit you with the full excess and the subsequent increase in premium.

    Yeah I'd slip them 150.
     
  4. Ceejay

    Ceejay New Member

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    I'm not sure. Long enough to defrost the food apparently! The tenants were away at the time
     
  5. kierank

    kierank Well-Known Member

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    Say the shoe is on the other foot.

    For example, the dishwater hose ruptures and floods your property.

    You claim on your building insurance policy and you are successful. It has a $600 excess.

    You ask the tenants to cough up half of your excess.

    Is this something you expect they would agree to? You have been good landlord so far!!!!
     
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  6. wylie

    wylie Moderator Staff Member

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    If the "event" was claimable on your insurance, would you be asking your tenant for half of your excess?

    Your problem will be your cost to fix. Their problem, though caused by your electrical issue is really their loss, their insurance, their excess.

    If your house flooded, would they expect you to cover their insurance excess?

    I don't know where you stand legally.

    Honestly, I sort of can see their side of things, and I'd probably slip them $150 to keep them sweet, but its annoying that they've even asked.

    Edit: @kierank and I were typing similar replies at the same time. We think alike. :D
     
  7. thatbum

    thatbum Well-Known Member

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    The food in their freezer cost more than $300?
     
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  8. wylie

    wylie Moderator Staff Member

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    It's probably freezer and fridge combined. But when I do a $300 shop I'm filling the fridge. No way would I claim insurance for this anyway and do the claim process (and risk an increase next year) for $300.
     
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  9. kierank

    kierank Well-Known Member

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    You are a lot softer than me ;).

    I have a guiding principle in business (and property investment is a business) and that is:

    “I will pay for those items I am responsible/liable for and I expect other people to pay for those items they are responsible/liable for.”​

    As you posted:
    Once one pays for items others are responsible/liable for, one set a precedent (a legal term) and them waters become muddied forever.
     
  10. chrish

    chrish Well-Known Member

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    $300 is a lot of food. I get why they would want to submit an insurance claim, but the excess is more than the cost of the food. I would give them some money (take it off their rent bill) as a token of goodwill, but I wouldn't agree to paying the excess.
     
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  11. The Y-man

    The Y-man Moderator Staff Member

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    Someone like @datto prob has something other than food in the fridge and worth a lot more than $300 :D:D:D:D:D

    The Y-man
     
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  12. D.T.

    D.T. Specialist Property Manager Business Member

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    I'd probably give them a $50 or $100 coles voucher
     
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  13. wylie

    wylie Moderator Staff Member

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    I'd spend the $150 rather than have them leave and perhaps not leave things tidy. Then have to lose rent while they either come back, or I cop the cost of getting the place ready for another tenant.

    Then I'd be up for advertising, letting fee etc.

    So, whilst it would stick in my neck, it would be purely a commercial decision on my part.
     
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  14. Poppy

    Poppy Well-Known Member

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    They must have 10 lobsters in deep freeze. I’m always good and extra generous with good tenants and would pay the lot as a gesture of goodwill — but would think them a bit stupid to make a claim for spoiled food. Who does that??
     
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  15. kierank

    kierank Well-Known Member

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    I would doubt that they would vacate over the $150 that was really their responsibility/liability.

    There is an old saying “You give an inch, they take a yard/mile”.

    For example, after giving them half the excess, what would you do if they wanted you to pay half the insurance premium?

    That is what I mean by precedence.

    You know me, I am a tough, old bas_tard .
     
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  16. wylie

    wylie Moderator Staff Member

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    I get your point. But no way would I pay half the premium.

    People aren't always sensible and if me giving $150 gives them a "win" and they settle down, then it's been worth $150 to me. I don't have to agree it's right (and I certainly wouldn't want to create any sort of legal precedent, but I doubt that would be the case). I'd make sure the letter would start with... "without prejudice" and make sure the words "ex-gratia" is in there somewhere. ;)

    We bought a house once where the contract crashed over $40 worth of ant caps. We put the ant caps on ourselves with a jack. People aren't always sensible and it isn't the $150 that a tenant might leave over. The dollar figure often has nothing to do with the fact by "giving" $150 towards their costs, even if I don't agree, and even if it isn't necessary legally, I might keep an otherwise good tenant.

    I understand we see this differently.
     
    Last edited: 12th Feb, 2020
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  17. willair

    willair Well-Known Member Premium Member

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    I may be wrong but i think the power has to off for over 24 hours for the insurance to kick in..imho..
     
  18. willair

    willair Well-Known Member Premium Member

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    Quote ..
    There is an old saying “You give an inch, they take a yard/mile..
    12-out of 10..

    That's the problem with irrational responses from some not all tenants is that it can cloud the need for rational ones..imho..
     
    Last edited: 12th Feb, 2020
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  19. kierank

    kierank Well-Known Member

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    I am probably a bit annoyed with one of our tenants due to the following incident late last year.

    One Friday night last December, the tenant noticed some water on the kitchen floor coming out from under the dishwasher.

    They did nothing and went to bed. WTF!!!

    In the morning, the whole unit was flooded as the input hose to the dishwasher had ruptured.

    On the Saturday morning, our PM had to organise:
    • a plumber to replace the hose,
    • an electrican to isolate the kitchen circuit, allow it to dry and re-energise it
    • a company to lift up the carpets, dry them, replace the underlay and re-lay the carpet
    We couldn’t claim the plumber’s cost as the hose caused the incident. We couldn’t claim the electrican’s cost as it was less than the building insurance excess. We could claim the carpet repairs on our landlord insurance but they subtracted the excess.

    From memory, total cost was $1,575 and we got back a total of $695.

    So, we were out-of-pocket $880, all because the tenant couldn’t be “bothered to investigate” the water leak. Simply turning off the tap on the input hose on the Friday night would have stopped the leak,

    I would love them to pay half or even better, the full amount of our out-of-pocket amount. Good luck with that.

    I put it down to the “joys of being a landlord “ :D.
     
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  20. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I learned something today. In NSW Ausgrid have a charter than requires them to guarantee power after a 12hr outage. So they will settle a claim for lost food if power is out for more time. Its only $80 however.
     
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