As the link between landlords and insurers, property managers are often asked why claims cost what they do, why repairs can take longer than expected, and what is driving premiums up.
Understanding the factors shaping today’s claims environment can help support more informed conversations with landlords.
Rising costs and longer repair times
The cost of repairing rental properties has increased significantly in recent years, driven by higher labour and material costs, ongoing trade shortages and increased demand following major weather events. Whether a claim involves water, fire, storm or tenant damage, repairs often require multiple trades and specialist materials, all of which are costing more than they once did.
At the same time, repair and rebuild timeframes have lengthened. Following large-scale weather events in particular, trades, builders and suppliers can face significant demand, creating delays that may extend well beyond the impacted area. For landlords and tenants, this can mean longer waits for repairs to begin and be completed, even when a claim has been approved quickly.
The impact on insurance claims
These factors have a direct impact on the cost of insurance claims. A claim that may have cost a certain amount a few years ago can be significantly more expensive today, simply because labour, materials and repair timeframes have increased. As a result, insurers, landlords and property managers are all navigating a claims environment where restoring a property often costs more and takes longer than it once did.
The rising cost of loss of rent claims
Property damage is only one part of many landlord insurance claims. When a rental property becomes uninhabitable following an insured event, loss of rent cover may help protect landlords from lost income while repairs are completed.
The rental market has changed significantly over the past five years. According to Domain’s December 2021 Rental Report, the median weekly rent across Australia’s combined capital cities was $499 per week. More recent market data shows Australian median rents have risen to around $650 per week, reflecting the significant increase in rental values experienced across much of the country.
This means that when a property cannot be occupied, the potential cost of a loss of rent claim can be considerably higher than it was just a few years ago. If repairs are also taking longer, the overall loss can increase further.
This highlights the importance of considering not only rebuilding and repair costs when reviewing insurance, but also the value of maintaining appropriate protection for rental income.
Why does this matter for premiums?
For many landlords, rising premiums can be a source of frustration, particularly if they haven’t made a claim themselves. However, insurance premiums are influenced by the overall cost of claims across the market, not just an individual property’s claims history. When repairs cost more and rebuilds take longer, the overall cost of settling claims increases. While many factors influence premium pricing, increasing claims costs remain an important part of the equation.
What property managers can do
While broader economic conditions cannot be controlled, there are steps property managers can take to help minimise disruption when a claim occurs:
- Encourage landlords to regularly review their building sum insured to ensure it is accurate and aligns with rising rebuild costs.
- Report maintenance issues early before they develop into larger problems and larger claims.
- Keep property records, inspection reports and photographs up to date.
- Lodge claims as soon as damage is identified.
- Maintain clear communication with landlords and tenants throughout the claims process.
A changing environment
Insurance claims are about much more than repairing damage. Behind every claim is a network of trades, suppliers, assessors and builders working together to restore a property.
As repair costs, labour challenges and rebuild timelines continue to evolve, understanding what is driving these changes can help property managers support landlords with realistic expectations.
The property market may change, but EBM RentCover aims to get clients back on track quickly. If you are looking for a landlord insurance partner that understands the needs of property managers and their clients, get in touch to learn how we can help.