Seven cyclones – Hilda, Irma, Joyce, Kelvin, Linda, Marcus and Nora – have battered communities across northern Australia in the last four months. Add in storms and flooding in Northern Queensland and numerous bushfires devastating properties in southern Australia, including parts of the NSW Far South Coast and south-western Victoria in the last couple of weeks alone. It’s been an awful disaster season and Mother Nature has certainly kept the insurance industry on its toes.
But it isn’t only insurers that need to spring into action when disaster strikes. You can pretty much guarantee that if a property on your rent roll is affected by a natural disaster, your mobile will run hot with calls from both the tenant and the landlord. And they’ll be looking to you to give them the right advice about what to do.
As a general guide, this is the insurance standpoint when these questions are asked:
Can I/my agent inspect my investment property?
Landlords and their agents can inspect a destroyed or damaged property at any time so long as the local authority/emergency services agree. The usual arrangements apply if the property is still leased and the tenants are living there (i.e. you need to give notice of an inspection).
From an insurance perspective, it’s important that both the policyholder and their agent understand their obligations under cover. For example, it is likely that they will be required to ‘act to prevent further loss or damage’; this could mean putting a tarp over a damaged roof, boarding up a broken window or moving undamaged possessions to safety. Failure to take steps to minimise losses, as soon as it is safe to do so, could void cover or result in all or some of the claim being denied.
You may need to call in the emergency services, such as the SES, so have the local brigade’s number handy. The first priority is always safety, so make sure tenants get out of harm’s way and never enter the premises until they have been cleared by emergency services and a licensed electrician/plumber/building surveyor (if applicable).
Can I clean up?
You/the tenants/the landlord can start cleaning up, but first take photos or video of damage to the property and possessions as evidence for the claim. (It is the owner’s and sometimes the agent’s duty to establish that a loss has occurred.) The insurance claimant (the landlord or tenant) should keep samples of materials and fabrics to show the insurance assessor; make a list of damaged and destroyed items with detailed descriptions; store damaged or destroyed items somewhere safe; and do not throw out any damaged items unless they pose a health risk, such as saturated carpets (document the damage with photographs or video or retain a sample), as the insurer will determine if the item will be repaired or replaced..
Who is responsible for repairs?
The owner is responsible for maintenance and repairs needed to bring the property back to a liveable condition.
It’s important to check with the landlord’s insurer about repairs – including emergency works. Some insurers need to authorise all repairs before they are carried out, while others allow emergency repairs to be undertaken prior to seeking authorisation. The insurer will also advise on the number of repair quotes they require.
All repairs should be completed by licensed/insured tradespeople (they’ll also generally need to provide a causation report for the insurer which clearly identifies the cause of loss or damage). Repairs carried out by tenants, landlords or ‘handy’ agents may not be covered by insurance.
What about the tenants’ possessions?
The tenant is responsible for cleaning or disposing of their damaged possessions. A landlord is not required to compensate the tenant for any possessions damaged or destroyed in the disaster (unless shown to be due to the landlord’s negligence). Tenants need to claim on their own contents insurance.
Can I claim loss of rent?
Whether the landlord can claim for loss of rent will depend on the policy they have and the terms and conditions of that policy.
How do I make an insurance claim?
If the policyholder needs to make a claim, they should immediately contact their insurer or broker and seek guidance on the claims process and also check what assistance they may be entitled to.
Natural disasters can have devastating effects on tenants and landlords when their home/investment is damaged, but providing accurate information is imperative when catastrophes first strike and later on when claims need to be made. Your insurance broker can also be an invaluable resource, so seek out their expertise.
The above advice about insurance is provided for your general information and does not take into account your individual needs. Please read the Product Disclosure Statement and Policy Wording prior to making a decision; these can be obtained directly from EBM.
Standard home and contents insurance will not protect against many of the risks that landlord’s face. Whether it is loss of rent due to an absconding tenant, malicious or accidental damage, or a whole range of other circumstances including tenant hardship, the RentCover range provides peace-of-mind to property owners like no other policy. And has done for over 25 years.
For more information, or to quote or apply online please visit rentcover.com.au.