It may be the most wonderful time of the year for some, but the festive season poses several increased risks at rental properties. EBM RentCover Managing Director Sharon Fox-Slater looks at 12 risks and their implications for landlord insurance.
From decking the halls to doing the Jingle Bell Rock, the wrath of Mother Nature to backyard cricket matches – the festive season can bring some surprises for landlords that do not come tied up with a bow, but can instead deliver a financial blow.
Let’s look at 12 risks of Christmas and what you and your landlord clients need to know about their impact on insurance.
On the twelfth day of Christmas, my insurer said to me…
Twelve months lost rent.
There is no denying that Christmas can be an expensive time of year for those who celebrate the season.
The added financial burden at this time of year could tip struggling tenants over the edge and result in them falling behind in their rent payments.
If they cannot catch up, they can end up in arrears, which can lead to eviction.
The simple fact is, insurance claims for rent arrears spike in January/February as the festivities take a financial toll.
In situations where the tenant falls into arrears, it is important to act swiftly as there are limits on the number of weeks insurers will pay out for loss of rent.
Eleven thousand volts.
While the 11,000-volt warning signs refer to high-voltage hazards, landlord-owned appliances can also be at risk of fusion damage (motors burning out from power surges or excessive current).
Overloaded circuits are common during festivities with extra lighting, fridges, entertainment equipment, and air conditioners.
Motor fusion can be costly, and insurance cover is not automatic in most policies.
EBM RentCover includes fusion coverage, offering up to $70,000 for motor fusion, subject to conditions.
Ten cyclones whirling.
It is the height of tropical cyclone season in Northern Australia. Each year, around 10 cyclones form around the nation, with three to four usually making landfall.
Already, TC Fina has struck this season, bringing destruction to Darwin and impacting WA’s Kimberley region.
Landlords with property in cyclone-prone areas should check their insurance policy to see if they have protection against cyclones and associated flood damage, as not all policies automatically include cover.
Nine ladies dancing.
Whether it’s friends dancing to the Jingle Bell Rock, family cricket in the backyard, children running amok on Christmas morning, or a spilled litre of cranberry sauce, festive gatherings at a rental increase the risk of accidents.
Tenants are responsible for damage caused by themselves, their children, guests, or pets, but accidental damage remains one of the top reasons landlords claim on insurance.
It is important to note that accidental damage is not automatically included in all landlord policies, but it is covered under RentCover Ultra, RentCover Platinum, and RentCover ShortTerm policies.
Eight guests a-calling.
Friends and family often drop by in greater numbers during the festive season.
If a guest is injured due to the landlord’s failure to maintain a safe property, the landlord can be legally liable.
It is essential that landlords have legal liability cover, tenants carry renters’ insurance with liability protection, and agents maintain adequate coverage, including Professional Indemnity, to protect against potential claims.
Seven disasters a-decorating.
A little tinsel is harmless, but sometimes tenants get a bit carried away with Christmas decorations.
Wiring lights, affixing heavy ornaments, painting, or altering the property can cause damage.
This type of deliberate or intentional damage may not always be covered by landlord insurance, though EBM RentCover provides up to $70,000 in protection.
Six BAL ratings.
For southern Australia, the festive season is also prime bushfire time.
Some of the nation’s most devastating blazes have occurred over the Christmas/New Year period, including 2019-20’s Black Summer.
This summer, there is a heightened risk of bushfires for regions in WA, NSW and Victoria.
While practically every property in the country has some bushfire risk, there are those with a much higher risk, which is why it is imperative to know the bushfire attack level (BAL) rating for the rental property.
The BAL rating not only determines what risk mitigations must be included but can also influence insurance on the property (those at a higher risk are likely to require higher premiums, or, in some cases, may be difficult to insure).
Five stolen rings.
It is the most wonderful time of the year for thieves.
The incidence of burglary climbs over the festive season.
Unless the rental is fully-furnished or fully-equipped (e.g. holiday home), if there is a break-in at the property, it is more likely that the tenants’ possessions will be stolen than the landlord’s.
But landlord-owned property can also be the subject of theft, including fittings and fixtures such as air-cons and copper wiring.
And it is not called breaking and entering for no reason, the property can suffer damage as a result of a robbery.
Which means, it is important that landlords check they have cover for theft in their insurance policy and understand when cover does and does not apply.
Four weeks’ leave.
At this time of the year, some people head off on holidays (around 75 per cent plan to travel over the summer), while international students and expats often head home.
This means, some rental properties will not be occupied by the tenants.
A growing trend is for tenants to sub-let their rental while they are away.
To many a landlord’s surprise, sub-letting is permitted in the various state and territory residential tenancy acts, so long as the tenant has the landlord’s written permission.
Although the legislation allows sub-letting, landlord insurers usually do not.
Sub-letting is an exclusion in most policies as it greatly increases certain risks at the rental that insurers are usually not willing to take on.
If your landlord is looking at granting permission for their tenant to sub-let, talk to their insurer about the implications for cover.
Three-minute blaze.
Fire authorities say it can take as little as three minutes for a fire to take hold in a home.
The festive season brings increased fire risks at rentals – from dodgy lights to overloaded power boards, flammable decorations to kitchen catastrophes, unattended candles to trees blocking smoke alarms.
Reminding tenants about some fire safety basics at this time of year is not a bad idea, and nor is checking that the landlord’s insurance is up to date, especially in terms of the sums insured.
Fire damage can result in major claims, and the last thing a landlord wants to discover is that they are underinsured if their investment property is destroyed.
Two pet pups.
With NSW and Tasmania becoming the last jurisdictions to make it easier for tenants to rent with pets this year, there may be more people looking at adding a fur baby to their household this Christmas.
If your landlords are asked to allow a pet into the rental, it might be an idea to review their insurance policy – not all landlord insurance providers offer pet damage protection, in fact, most do not.
EBM RentCover provides up to $70,000 in cover if the tenant’s domestic pet causes damage to the rental and they do not make good on their obligation to repair the damage their pet has caused.
And a landlord insurance policy!
With the additional (and often heightened) risks that come with the festive season, it is a good time for landlords to review their insurance cover.
This includes understanding what is included and excluded, meeting policy obligations like maintaining the property and preventing further loss, ensuring the policy suits the type of rental and letting arrangement, and confirming sums insured reflect current replacement and rebuilding costs.
With the right cover in place, landlords can be protected against festive mishaps and enjoy the season with greater peace of mind.
If you have any questions about insurance cover for your landlord clients, get in touch with your EBM RentCover Relationship Manager. Not partnered with us? Get in touch today.
