Property Management and Landlord Insurance

Hi guys

Ive been doing some research on Property management and landlord insurance

Ive had some feedback from people saying some insurer's wont even insure you if you dont have a property manager if something were to happen? And may not cover you

I am not suprised at this as insurance companies tend to sell you promises but when you need them they dont deliver

Also if something did happen such as damage caused by tenants or they defaulted on rent payments. Do Insurance companies always take your bond first to cover the expense?

Also is a condition report required with getting insurance?

 

Definitely. They ask us to send through lease, ingoing and outgoing condition reports, ledgers, photos, invoices/quotes, breach notices, tribunal transcript, etc when we lodge claims on behalf of clients. I assume they'd ask the same of a private landlord, but in many cases they don't have the correct forms available to them.

Most of the insurers I've worked with word it differently - but essentially yes, the whole bond needs to be used up before being given more money. You can use this to your advantage by allocating different bills to bond or insurance and increasing your claim amount accordingly but understanding the policy well.

A couple of my properties are with Allianz and they asked if the properties were professionally managed, but still took them on. I assume they price that into the policy - obviously less risk if a PM is looking after it. Most of my props are with EBM and they've never asked or cared, as far as I know.

 

Thanks D.T

I can get all this organised before getting insurance done. The only thing that might be difficult is the bond

The tenant is a relative. As we are family I did not charge a bond. ( Probably should have )

Cant really ask for 1 month bond now as theyve been in the property a while now

In this case of no bond. I guess I would need to just pay the extra costs to the insurance?

 

In SA we can charge bond after the fact, I'm not sure if you can in other states.

Having no bond is likely to void your insurance claim.

 

Does the bond have to be 1 months rent or can the land lord choose how much to charge bond ?

 

Wrote a tip on this already - Tenancy Tip Thursday - Rental Bonds

I think the insurer wouldnt like it much if you charged less than maximum.

Also - I'm a bit confused - you make it sound like they'd be willing to pay a bond, yet you're doing an insurance claim. What actually happened here? Maybe instead of charging them a bond, use that money to fix up the repairs and get a new PM and new tenants.

 

If cash flow is an issue.
Explain the situation to your relative. Tell them its for their own benefit too.
And maybe get them to pay the bond in 4 installments. But you wont be insured for this period
Or you can fork out the bond. Insure it and get the money off them.(this depends on how much ypu trust them too)

 

I think ill just do this and if something happened ill just get it back off them. Later on They will pay back but probably in installments ( if something where to ever happen )

Nothing has happend... Im just wanting to get landlord insurance i have not got it yet

 

Just make sure the insurer knows (preferably in writing) that the tenant is a relative.

Family issues can make things murky in the event of a claim as collusion may be suspected.

Make sure everything is done strictly by the book and keep good records - regular inspection reports, correct notices issued if rent is late etc.
Marg

 

yes this is why i want a PM to manage it, so everything is done correctly...

Yeh family is more trouble than its worth

 

There are some policies I believe that require you to have the property professionally managed, there are also some that have a different policy wording if you do not have it professionally managed.

This is where you need to be careful. As DT said, generally insurance will require you to exhaust your bond, and some allow that to be on items which are tenant responsibility but not claimable, such as cleaning and minor repairs. This may also be able to be used to cover any excesses. HOWEVER - many of the "major insurer" policies actually exclude the first 4 weeks and then charge an excess on top of that (which may be an excess on loss of rent whereas the better policies have no excess on rent loss). In many cases this may negate claims completely or at the very least diminish their value substantially.

Like any form of insurance, you need to be able to prove you've suffered a loss.

 

Most policies will require there to be a bond equivalent to at least 4 weeks rental value in place before you arrange the insurance. You would be agreeing to that term as you sign up, without it, your policy would be likely to be void.