“Landlords will be reassured to find there’s a gap between what they’re most concerned about, and the types of claims we see most often; accidents that can happen in any home,” says Amelia Macandrew, Customer Relations Manager at AA Insurance. “However, while accidental loss and damage is more prevalent than intentional, it’s important to remember that it can still happen so it pays to have the right insurance.”
As one customer discovered when he had a really bad run with his tenants. He was advised by his property manager that his tenants had broken internal doors and locks, smashed several windows, and damaged the kitchen bench tops – drug use was suspected. The tenants, described as ‘a really nice couple’, had flatmates that vacated the property without notice, leaving our customer with missing rent payments. His landlord policy covered the damage as well as the loss of rent for $3,800.
While the main issue for landlords is physical damage to their property and loss of income, there is a growing concern for contamination by illegal drugs.
“We know these issues can be worrying to landlords, especially when it’s an investment for their future, so it pays to check you have the right insurance for your circumstances as insurance is designed to cover sudden and unforeseen damage,” Amelia says.
“Loss of rent and natural disasters are generally available under standard cover, but check with your insurer for optional benefits for tenants who leave without notice, are evicted, cause intentional damage, or who use or make illegal drugs. That way, if the worst does happen, you know your investment will be protected.
“If you’re about to purchase a rental, then do your due diligence and ask for the property to be tested for drug contamination, if it hasn’t already, or carry out a test yourself,” says Amelia. “If you already own a rental then consider including this type of test in your property inspections.”
What are tenants concerned about?
In the same AA Insurance survey 500 tenants were interviewed. The survey found that 72% were concerned about rent increases happening more than once a year, as well as repairs not being fixed correctly or adequately. A further 71% were worried their landlord would refuse to conduct repairs without putting the rent up, as well as repairs taking too long to be completed. Tenants were less worried than landlords about illegal drugs, with 66% saying they were concerned about damage to their contents or health.