August 11, 2016
New reasons to take out landlord’s insurance
Illicit activity in residential property is on the rise
Sadly, illicit activity – such as the establishment of residential methamphetamine laboratories – has increased in recent years. The Australian Crime Commission's Illicit Drug Data Report reveals that police raided 744 clandestine drug labs across Australia in 2015, 70 per cent of which were found in residential locations.
The process of producing methamphetamine is highly dangerous. The smallest spark can result in a significant explosion and considerable damage to a home. Meanwhile, cleaning up the remains of an illegal meth lab can cost between $20,000 and $70,000!
It’s tempting to imagine that illegal meth labs are only set up in high crime areas. Yet the organised crime rings behind most such laboratories do not stick to particular localities. No quality property is immune, and no suburb is left untouched by organised crime today.
Won’t tenant screening protect my property?
Of course a quality property manager will do everything in their power to ensure your rental property is let to the best possible tenant. Yet sophisticated methamphetamine laboratory operators can be adept at manipulating tenant screening processes by creating a seemingly perfect façade – including documentation. Also, sadly there are existing tenants who may start off perfectly well but for many reasons, fall into crime or addiction.
Loss of rent
Importantly, landlord’s insurance policies will help you to cover the rent of a property should the tenants decide to leave without going through the proper processes. In these cases, the policy provider will cover loss of rent – allowing you to keep the home functional while you deal with the fallout and look for new tenants.
“Tenant selection at Jellis Craig is rigorous and every effort is made to ensure your tenants are going to do the right thing, look after your property and pay their rent on time,” says General Manager, Jellis Craig Boroondara Property Management, Sophie Lyon. “Occasionally though, problems do arise, so we view loss of rental income protection as vital.”
Landlord insurance that protects your building against loss or damage caused by tenants, their family or their invited guests provides extra peace of mind. Repair bills can quickly add up if serious damage is done to your property. Damage caused by an unapproved pet can also come under this heading.
A tenant with a grievance may even maliciously damage your property – punch a hole in the wall for example, or break a window. A quality landlord’s insurance policy will cover you for such damage, so you don’t have to dip into your own savings to pay for repairs.
Theft of contents is more common than many property owners realise. Light fittings, curtains and other fixtures may leave your property when your tenant does or during a period of vacancy – landlord’s insurance will cover you for such unscrupulous action and ensure you can replace these items quickly, before a new tenant moves in.
What to look for
While insurances are an unwanted cost, landlord’s insurance is a tax deductable expense for investment property owners, says Sophie.
“At Jellis Craig we recommend you make contact with an insurance expert to discuss the options available to you to ensure you get the right policy for your investment.”
“Check that your policy covers you for loss of rent, theft and malicious damage, and also make sure that you’re covered for chemical contamination as a result of the manufacture, storage or distribution of any controlled drug.”