A series of unusual property investment insurance claims has highlighted the need for landlords to have adequate risk management and effective property managers.
RentCover, the landlord insurance division of EBM Insurance Brokers which covers over 120,000 investment properties, said the company received over 4,200 claims in the 2013/2014 financial year and paid out more than $12 million to investors.
The insurer highlighted an incident where an investment property in Terneit, Victoria was written off after a tenant moved out of the property without notice and left the taps running, with plugs still in place. The taps ran for a week before the property manager visited the property.
RentCover general manager Sharon Fox-Slater said it was the worst case of mould damage she had ever come across, but that the situation was largely unavoidable.
“It’s difficult to imagine how an incident like that could be prevented short of posting a 24-hour guard on every property,” she said.
Claims paid over the past financial year ranged from comparatively modest sums for tenancy tribunal application fees to hundreds of thousands of dollars for total property losses, the company said.
Common claims included loss of rent, often combined with malicious damage by tenants angry at being forced to leave.
There was also a record 15 claims for costs associated with cleaning up clandestine drug laboratories – leading to a combined total forensic clean-up bill of more than $350,000 for the year, or an average of more than $23,000 per property.
Ms Fox-Slater said although there were no guarantees, hiring a professional property manager could help reduce the risks.
“Property managers can screen tenants against databases, conduct thorough reference checks and inspect properties regularly while being alert to potential warning signs,” she said.