31 March 2016
Victorian tenants have become more reliable when paying rent, but landlords suffered a major increase in malicious damage caused by their tenants in the last financial year, RACV Insurance data has revealed.
RACV General Manager Insurance, Paul Northey said there was a drop of 3.5 per cent in rental default and leave without notice claims in the 2014-15 financial year but malicious damage claims rose 24 per cent to 495.
“The incidence of malicious damage by a tenant has increased each period for the past five years and repairs have also become more expensive,” Mr Northey said.
“Last year the total cost of these claims doubled to more than $3.4 million.”
“We were also able to assist our members with payments of more than $2 million in Insurance claims for landlords whose tenants defaulted on the rent or left without notice.”
“The high number of claims relating to malicious damage by the tenant and loss of rental income demonstrates the importance of screening prospective tenants carefully by checking with referees and past property managers,” Mr Northey said.
Escape of water, which is often caused by a burst water pipe, and storms were the two most common causes of landlords lodging insurance claims. Damage repair for these incidents cost an average $5,461 and $2,159 respectively.
“In total, landlords lodged 2,753 claims with RACV Insurance in 2014-15,” Mr Northey said.
“This reflected a 5.6 per cent increase in the number of claims compared to the previous financial year. However, the cost of the claims increased 31 per cent to almost $15 million. Against this trend, we received the lowest number of incidents for four years for fire, fusion, falling trees, and public liability.”
Brimbank local government area recorded the most landlord insurance claims for the fifth successive year. Landlords lodged 401 claims in the municipality; more than double that of Casey which ranked second. Over the past five years, claims for rental default and tenant malicious damage totalled 651 in Brimbank, ahead of 297 in Melton and 247 in Casey.
Mr Northey said the RACV data reinforced the need for landlords to protect their investment by having the right type of policy in place and to know what they are covered for.
“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,” he said.
Attached: Regional angles, RACV Insurance claims statistics and Tips for landlords.