Is your rental property adequately insured?
A number of our clients have rental properties and many use these as a way of saving for retirement. Traditionally bricks and mortar types of investments have been seen as a low risk investment, but are they safe?
Earthquakes aside, we have recently been made aware that there are even more insurance issues to be aware of that may affect investment property owners.
Some insurance companies are now reviewing whether the landlord has taken sufficient steps to protect their investment when determining if they will accept a damage claim.
Take the scenario of a couple who are looking for a new tenant for their empty rental property. A prospective tenant agrees to pay the full rental amount and even offers to pay six months’ rent in advance to secure the property. The tenant moves in and a few months later the police advise that they have found a Methamphetamine Lab at the property. Decontamination costs amount to over $100,000. This should be covered by your rental property insurance, shouldn’t it?
In a case we are aware of, the insurance company declined the claim on the basis that the owners could not prove that they had taken any steps to vet the tenant or do regular property inspections which may have limited the damage to the property.
In an article on Stuff recently, it was advised that Airbnb owners may not be insured if a guest damages property or steals contents from the property.
So what is the answer?
The first step is to ensure you have adequate insurance cover for your requirements, Secondly, know the fine print of what your insurance company requires from you as the property owner to mitigate any damage to ensure a successful claim if the need arises.
If you are using a property management company to manage your property, you also need to make sure that they are aware of the insurance company’s requirements.
Thank you to David Hopkins from Rent Right Property Management for his assistance in compiling this article.