Damage is damage, right? WRONG! This is not the case when it comes to insurance cover.
Insurers treat damage types differently and knowing the variances can mean the difference between adequate cover and a successful claim – or not!
At EBM RentCover, we know this can be confusing for landlords and property managers, so here’s a rundown on damage and how it relates to insurance claims.
There are three main categories of damage considered by insurers:
- Accidental – unexpected and unintended loss or damage e.g. wine spilled on carpets or hot pots left on the kitchen bench
- Deliberate – damage caused on purpose by the tenant e.g. placing hooks in the walls for hanging pictures, repainting walls or DIY renovations
- Malicious – caused with malicious intent to damage the property (and requires a police report) e.g. holes punched in walls and graffiti.
Damage cover varies among insurers and not all will cover each type – in fact, most exclude one or more (and may or may not cover both the building and contents). Excesses also often vary depending on the type of damage.
The difference between the types of damage lies in the intention – or the cause – behind them.
Accidental damage results from an unforeseeable or unintentional event (not caused on purpose). It is sudden and unexpected. This kind of damage to property should not be confused with general wear and tear, which occurs over time and is expected, and is not covered by insurance.
Examples: Spilling wine on carpets, gouging walls as you move furniture around, cleaning the carpet with bleach, damage caused by kids scribbling on walls, or tiles cracking when heavy objects fall on them.
TIP: Although accidents can and do happen frequently, this type of damage is often not covered by other insurers as standard, and may need to be purchased as an optional extra.
When a tenant damages or alters the current state of the property ‘on purpose’, but without malicious intent or by accident, it is generally considered deliberate. Tenants want to make the place their own – this is often the motivation behind the redecoration or modifications made without the owner’s consent, and the intention is not specifically to cause damage.
Examples: Nailing holes in the walls to hang pictures, removing blinds, repainting, taking up carpets/flooring, erecting pergolas or installing water features. This also includes houses being modified for the use of drug labs.
Coverage: At EBM RentCover, claims for damage deliberately caused by tenants are assessed on a case-by-case basis.
A tenant had been living in a property for approximately three years. When they vacated, the owner attended the property and found the tenant had painted the exterior of the house without permission, painted feature walls in bright colours inside the property, and also made major modifications to the backyard including installing a stone pizza oven, a trellised pergola, raised brick garden beds, and a fishpond. The $13,000 claim covered the cost to repaint the exterior of the property, repaint the interior feature walls, remove all the unapproved garden modifications and repair the damage to the premises caused by them.
Malicious damage is often the subject of most confusion among landlords who may think the damage caused by tenants was malicious when in fact it was deliberate. For the damage to be considered malicious, there has to have been malicious intent behind it (carried out with vindictiveness or spite). The perpetrator must have been motivated by malice and intended to cause damage, and a police report is often required to prove this.
Examples: Punching through doors, kicking holes in walls, smashing windows or ripping out fittings and fixtures.
Coverage: It is a standard inclusion in EBM RentCover policies (Ultra, Platinum and ShortTerm), providing up to $65,000 in cover. Despite being a common reason for making a claim, this type of damage may not be covered by other insurers or may only be covered when it is the result of a burglary or act of vandalism, rather than when carried out by the tenant or another person legally on the premises.
TIP: One of the biggest areas of confusion is where there has been a fight at the property and the property is damaged. This is not malicious damage, its actually accidental because the intent was to hurt the other person not the property.
The intent behind the damage can be the difference between a claim being paid or not – so it is important for clients and agents to understand what types of damage are covered, which are excluded and the limitations of the policy.
At EBM RentCover we strive to do right by our clients – we are a voice of knowledge in times of uncertainty and we are here when you need us. The majority of our policies cover accidental or malicious damage, giving you extra peace of mind (for deliberate/tenant damage we will see what we can do).