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The best time to handle damages is before they happen

Sandhu’s story is an alarming one. After termination and eviction, groups (that may or may not be affiliated with the tenant) arrived at the property on separate occasions to cause significant damage. By the time the story was reported, Sandhu’s property had been completely destroyed.

While the extent of maliciousness, in this case, is unusual, damages to rental properties (ranging from accidental to malicious) are not uncommon. Since landlords have little control over how properties are treated during the tenancy, the best time to handle damages is before they happen. And that means being particular with aspects of your insurance policy relating to damages and loss of rent.

Related video: What if your rental gets trashed

Rene Swindley from Initio Insurance shares some insurance takeaways for landlords based on Sandhu’s experience:

✅ Not all landlord policies include a loss of rent cover; check that yours has it. If you are with Initio, don’t worry; loss of rent cover comes with all of its landlord policies.

✅ There are generally two types of loss of rent cover: one addressing the loss of rent while the property is being remediated and another addressing tenancy failures such as arrears and abandonment. Not all loss of rent cover/add-ons includes both.

✅ Be very careful about the sum insured figure for loss of rent. A $20K maximum cover would go very far in areas like Te Awamutu but not so much in Auckland.

✅ Vacant houses are vulnerable. Oftentimes your insurer will apply a higher excess when a property is left vacant for a long period of time and/or broaden the policy to cover specific perils (such as fire, storm, or earthquake). Make sure you let your insurer know if the property is vacant for four weeks or more.

✅ If your vacant property is damaged, your first phone call is to the police, and your second phone call is to the insurance company. Find out from your insurer if you are obligated to secure the property against further damages and get best practice guidance from it to help you do so.

✅ To maximise and expedite your claim, always ensure you meet your obligations under the policy, such as taking reasonable care to select tenants, monitoring rent and carrying out regular inspections.

One of the biggest risks you face as a landlord is the lack of physical control over your rental property. But if you are careful with picking the right insurance product that can rise up to meet these what-ifs and you are particular about satisfying all of its conditions, then you are in as good a position as you can be to handle these shocking surprises.

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