Case studies

What landlords are actually claiming for… and how insurance helps

If you have ever wondered what really happens behind the scenes of landlord insurance like how often policies are actually claimed on, and what landlords are claiming for, you are not alone. In this article, we tackle a common question head-on: do insurers really pay out claims? Read on to see the numbers for yourself…

Last year, EBM RentCover settled more than 7,000 claims, paying out approximately $43.5 million. That breaks down to around 27 claims every business day, with an average payment of approximately $6,200 per claim.

So, what kind of claims drive those numbers and where are landlords most often turning to EBM RentCover for support?

Tenant-related issues

Most claims are linked to tenant-related issues, situations where standard insurance would not offer protection. This includes things like loss of rent or accidental damage caused by tenants.

Example – Rent Default – $7,711

The tenant stopped paying rent and was issued a notice to vacate. The tenant refused to leave and a court order was issued granting possession of the property. However, as the tenant continued to refuse to vacate, a warrant of possession was carried out by the police and the tenant was finally evicted. The landlord was able to make a $7,711 claim. Rent default in this situation can typically be claimed under both RentCover Ultra and RentCover Platinum.

Example – Rent Default and Denial of Access – nearly $14,000

After defaulting on their rent, the tenant was issued a termination notice… which they ignored. Not only did they fail to vacate the property, but they also did not catch up on the overdue rent. So, the agent had to apply to the tribunal for possession. It turned out to be the first application of many – in fact, 19 in total. The tenant constantly requested adjournments and appealed all the tribunal orders. Despite the stalling and protestations, possession was awarded to the landlord, and they got their rental back. But not before 316 days had passed since the termination notice was first issued and legal expenses had been incurred. The claim for 316 days’ loss of rent (four days for rent default and 312 days of denial of access) and legal expenses was settled at a cost of just under $14,000. Rent default and denial of access in this situation can typically be claimed under both RentCover Ultra and RentCover Platinum.

Example – Accidental Damage – $17,430

The tenant fell into arrears and vacated the property. In the final inspection, the agent found multiple stains on the carpets throughout the house, broken blinds, the vinyl in the kitchen had been torn from moving the fridge, there were multiple small holes and divots in walls throughout (some from the door handles), knife marks on the kitchen benchtop, hair dye stains on the ensuite vanity, and torn flyscreens on some of the windows. The $17,430 accidental damage and loss of rent claim was paid. Accidental damage and rent default in this situation can typically be claimed under both RentCover Ultra and RentCover Platinum.

Liquid damage

A common landlord insurance claim not related to tenants involves water or liquid damage, such as burst pipes, overflowing baths, leaking roofs, or sewer backups.

Example – Burst Pipe – $54,500

A water pipe burst under the bathroom vanity. As the rental was vacant at the time, the damage was not discovered until a neighbour noticed water coming out of the property and called the landlord. Most of the home was inundated with water and the flooring, skirting boards, doors and vanities all had to be replaced, at a cost of $54,500. Water damage in this situation can typically be claimed under both RentCover Platinum and RentCover ShortTerm (contents and building).

Example – Storm – $195,000

Excessive rain and high winds caused two large gum trees to fall onto the roof of the investment property. The gaping hole allowed water to pour into the property and a tarpaulin could not be erected to cover the roof until a crane removed the trees. While the roof was exposed, extensive damage was caused by rain entering the premises. The cost to repair the damage topped $195,000 and included loss of rent as the tenant had to vacate the house because of the extensive damage. Water damage and loss of rent in this situation can typically be claimed under RentCover Platinum.

Pet damage

Some pets are soft, cuddly, and seemingly innocent, while others can leave behind a bit more of a mess than you might expect.

Example – Pet Damage – $1,400

A pet owner and a dog with a penchant for chewing things left the landlord with a $1,400 repair bill. The damage was discovered when the tenant moved out, with the exit report photos showing that sections of floorboards and skirting had been chewed in one room. It also showed that the dog had managed to get hold of a pen and proceeded to chew it to bits in the bedroom – the bits were still on the carpet, along with the ink stains. The payout covered the repairs to the floorboards, skirting and carpet. Pet damage in this situation can typically be claimed under both RentCover Ultra and RentCover Platinum.

Glass breakage

Windows, shower screens, basins, and sinks… they can all crack or break, and when they do, repairs or replacements can be costly. That is exactly where insurance comes in to help cover the expense.

Example – Glass Breakage – $949

The tenants vacated the property and it was discovered there was damage to multiple windows and wardrobe mirrors (glass breakage is considered an insured event, not accidental damage). Luckily the owner had building insurance and was able to cover the $949 cost to replace the garage window and broken mirrors. Glass breakage in this situation can typically be claimed under RentCover Platinum.

Fusion

When you think about what could go wrong in a rental property, a motor fusing probably is not at the top of the list. Yet it happens more often than you might expect. Common culprits include air conditioners, fridges and freezers, ovens and stoves, dishwashers, and washing machines and dryers.

Example – Motor Fusion – $1,318

The tenant let the agent know that the air conditioning was not working properly in the property. So, a technician went to the property and discovered the motor had fused. The landlord put in a claim and EBM RentCover received a quote to replace the unit. However, it was requested a revised quote be provided to just replace the motor, which was then provided and a claim was settled for $1,318. Motor fusion in this situation can typically be claimed under both RentCover Ultra and RentCover Platinum.

These claims show that assuming “it won’t happen to me” can be a risky approach for landlords and property managers, especially if it means going without specialist insurance.

No two policies are the same, and no two claims are the same. At EBM RentCover, each claim is assessed on a case-by-case basis to make sure the right support is provided.

At EBM RentCover, we can help. If you want to talk about your insurance, your cover, or how claims work, get in touch – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 954 374 if you have any questions.

About the author

Sharon Fox-Slater

Managing Director, EBM RentCover

Adv Dip Fin Serv (Genl) GPIB FNIBA FAIM ANZIIF (Snr Assoc) CIP

Sharon joined EBM in 1993 and was part of the core team that helped launch one of Australia's first landlord insurance policies. She has transformed EBM RentCover from a small start-up into a national operation, protecting approximately 155,000 policyholders.

Sharon is passionate about the role insurance plays in providing certainty for people, in times of uncertainty. It is at the heart of everything she does. Sharon and her team of specialists strive to educate and empower property partners and landlords, helping them understand the true value of protecting investment properties.