Across Victoria, landlord insurance claims increased almost 24 per cent and cost almost 11 per cent more in 2016 than in the year previous, new RACV data has revealed. Storms and acts by tenants including damage, rental default and leaving without notice, resulted in the more than half the insurance claims.
Storm damage across the state accounted for the largest proportion of landlord insurance claims at 29 per cent while escaping water claims (e.g. from burst pipes) resulted in 18 per cent of all claims and caused more than $2.8 million in damage. Storm-damage related costs tripled in 2016 when compared to the previous year, totalling almost $3.2 million.
Overall, Victorian tenants were more reliable in 2016, with landlord insurance claims for malicious damage, rental defaults, or leave without notice dropping by four per cent. However, the cost of the claims still totalled nearly $6 million and was slightly more than in 2015. Out of all local government areas (LGA), Brimbank recorded the most landlord claims for the third successive year.
“In addition to tenants causing damage, landlords should also consider the cost of natural disasters, such as storms, floods and fires and how a lack of adequate insurance cover could seriously impact their investment return,” said Stacey Maher, RACV Home Insurance General Manager. “The RACV data reinforces the importance for landlords to protect their investment by having the right type of policy in place and to know what they are covered for.”
Tips for landlords
- Screen prospective tenants carefully. Check referees and past property managers.
- Tenants who do not pay the rent can be just as costly to landlords as those who cause damage. If rent is paid late, take action immediately.
- Ensure you have adequate landlord insurance for your needs, which covers against malicious damage and loss of rental income.
- Have your property regularly inspected and record its condition. If damage caused by a tenant is not recorded during an inspection it may be costly to repair later. Also, if maintenance issues are not fixed, the landlord may face legal liability if a tenant is injured.
- Consider getting a high-quality real estate firm to manage your rental property.