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Do You Have the Right Insurance

By Luke O'Kelly

I must preference this article by saying this is general advice only and you should consider your own personal circumstances when considering insurance. You should always read the Product Disclosure Statement of any insurance or financial product.

Now that I have got the formalities out of the way down to the point of this article. We find that many property owners are under insured or insufficiently insured – particularly when it comes to unit and apartment coverage. Many believe that the Body Corporate insures the building, as such you don’t need building or contents insurance. In most cases this is not correct.

Most Body Corporates only insure the external and common areas of the building and not the interior of the strata unit or courtyard. It is not until a claim is necessary, that landlords become aware that they are not sufficiently insured.

While the building and common areas are covered by the Body Corporate Insurance it is recommended that landlords also have contents insurance to cover the interior of their unit and the items excluding the buildings policy.

I recently processed a claim for a landlord following a washing machine fire. The washing machine caught on fire and smoke filled the townhouse. Fortunately the Fire Department put out the fire before it spread through the entire unit, but the fire damaged the entire laundry and smoke damaged the carpet, paint, blinds and air-conditioning unit. It was amazing to see the damage resulting from the smoke alone.

In this case the Body Corporate insurance covered the repairs to the structure, including the fire damaged walls and paint but it excluded the carpets, blinds & air-conditioning units all of which were filled with soot. Fortunately the Landlord had contents cover as part of their Landlord Insurance Policy, which covered the fire & smoke damaged items, along with the loss of rent which is why the policy was put in place. The Landlord Insurance policy in this case replaced the carpets throughout the property, replaced the air-conditioning unit and replaced all the vertical blinds.

It is also important to have a Landlord Insurance Policy that covers in the event of a tenant not paying their rent or causing damage to the property. It does not matter how diligent your property manager is, there are times when a tenant may abscond or not pay their rent. There is also cases in which a tenant may apply to QCAT to have their lease terminated due to financial hardship, causing a landlord to be out of pocket.

It is important to select a Landlord Insurance Policy which does not have a claim inhibitive excess and which covers:

  • Absconding tenant
  • Defaulting tenant
  • Failure of a tenant to give vacant possession
  • Death of a tenant
  • Tenant hardship
  • A property becoming untenantable
  • Prevention of access

It is important to ensure you are fully insured for all possibilities, as it is often not until you need to claim that you realise what is excluded from a policy.

Speak to Ray White West End about our Concierge Support Team who can assist you in setting up the right insurance policies.

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