Insurance: It Doesn't Matter Until It Matters

A timely reminder to review your landlord insurance

When was the last time you reviewed your landlord insurance policies?

After dealing with a couple of particularly difficult insurance claims recently, we felt it was timely to remind our clients that having insurance is one thing, understanding exactly what you are covered for is another.

We recently managed a significant water damage claim where a burst pipes in the ceiling occurred while the tenant was away. The tenant returned to find approximately 3-5cm of water throughout the property. The incident occurred on a Saturday while the owner was overseas.

Our team immediately arranged emergency water extraction and repairs, notified the insurer and lodged the full claim by the following Monday.

Unfortunately, the damage was extensive. Ceilings collapsed in all three bedrooms, the lounge room, part of the kitchen and passages. The flooring was not salvageable, and lighting had to be removed from all three bedrooms.

What followed was almost two months of detailed discussions, evidence gathering and negotiations between the owner, insurer, contractors and our Property Management team to achieve an appropriate outcome.

The importance of understanding your cover

One of the key issues was Loss of Rent.

The insurer initially questioned whether the property was considered uninhabitable because it still had running water, electricity and bathroom facilities.

This is where having an experienced Property Management team can make a real difference.

Our team needed to consider not only the insurance policy, but also the requirements of the Residential Tenancies Act 1987, minimum property standards and local health and safety requirements.

We worked closely with the owner to build a detailed case based on the facts, the condition of the property and the applicable requirements. Following extensive discussions and escalation, the Loss of Rent claim was ultimately accepted, with the owner covered for up to 52 weeks of loss of rent during the repair period, subject to the terms of their policy.

We have also submitted detailed findings and supporting information regarding the repair costs and are continuing to seek reimbursement of the appropriate costs associated with restoring the property.

So, what can you do?

Review your policy before you need it.

We encourage all landlords to take a few minutes to review their current landlord insurance and speak with their insurer or broker to understand:

Loss of Rent: What circumstances are you covered for, and for how long?
Building Cover: What damage to the building is covered?
Contents: What landlord-owned items are covered?
Flooring: Is your flooring covered, or does it fall outside your building policy?
Window Furnishings: Are curtains, blinds and other window treatments covered?
Excess: How much will you need to contribute if you make a claim?
Uninhabitable Premises: How does your insurer define an uninhabitable property?
Temporary Accommodation: Is this covered where applicable?
Repair Requirements: Are there conditions you need to meet before certain claims will be accepted?

It is also important to remember that landlords have responsibilities under the Residential Tenancies Act 1987 to maintain premises in a reasonable state of repair and ensure urgent repairs are addressed within the required timeframe.

A property must also continue to meet applicable safety, health and minimum property standards throughout the tenancy.

In the event of significant damage, determining whether a property remains suitable and lawful for occupation can involve more than simply whether the property has electricity, water and bathroom facilities.

It doesn't matter until it matters.

Insurance is something we all hope we never need to use. However, when the unexpected happens, understanding your policy and knowing exactly what you are covered for can make a significant difference.

We aren't insurance advisers and cannot advise you on which policy you should have. However, we strongly encourage you to speak with your insurer or insurance broker and make sure your cover is appropriate for your investment.