This article was originally published on 05/08/2019 and was reviewed and updated accordingly on the above date.
Not all damage is considered equal when it comes to insurance. If you have an investment property, understanding that there are different types of tenant damage can mean the difference between a claim being paid or not.
As a landlord or property manager, seeing the rental damaged by tenants is all you need to know – the carpets are ruined, the window is broken – and your priority is getting it fixed through the landlord insurance. But your insurer will need to know more before they can pay out.
Insurers generally classify tenant damage in three types:
Any claim for repairs will depend on how the damage is classified. It is worth noting that not all landlord insurers cover all three types of tenant damage – 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.
TIP: The difference between the types of damage is based on the intention – or the cause – behind them.
It’s a good idea to understand the different types so you can make sure you choose the most suitable protection for an investment property.
Accidental damage results from an unforeseeable or unintentional event (not caused on purpose). It is sudden and unexpected, such as spilling wine on carpets or tiles cracking when heavy objects fall on them.
It is a standard inclusion in all EBM RentCover landlord policies except Householders Rental (but may be purchased as an optional extra) and provides up to $65,000 in cover. Our policies also cover damage caused by domestic pets.
Although accidents can and do happen frequently, this type of damage is often not covered by other insurance providers as standard.
TIP: Accidental damage should not be confused with general wear and tear which occurs over time and is expected, and is not covered by insurance.
If a tenant damages or alters the state of the property on purpose, but without malicious intent, it is generally considered deliberate. “Making the place our own” is often the motivation behind redecorating or modifications made without the owner’s consent, and the intention is not specifically to cause damage, for example, nailing holes to hang pictures, DIY renovations, putting up shelves, removing blinds, repainting, taking up flooring, erecting pergolas, putting in garden features, or installing child safety gates or locks.
At EBM RentCover, claims for damage deliberately caused by tenants are assessed on a case-by-case basis.
TIP: Residential tenancy legislation in some jurisdictions has been changed to allow tenants to make ‘minor modifications’ to the property with or, in some instances, without the landlord’s consent. Before submitting a claim for deliberate damage, check your state/territory RTA as your insurer will be guided by relevant legislation.
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 must have been ‘malicious intent’ behind it (carried out with vindictiveness or spite). The perpetrator must have been motivated by malice and intending to cause damage, for example, punching and kicking doors or walls, smashing windows, graffiti, or ripping out fittings and fixtures. Wilfully damaging or destroying another person’s property is criminal damage and must be reported to the police.
This is a standard inclusion in EBM RentCover landlord policies except Householders Rental (but may be purchased as an optional extra) and provides up to $65,000 in cover. Be aware that you will need a police report in order to make a claim for this type of damage.
Despite being a common reason for making a claim, malicious damage may not be covered by other insurance providers 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: If a fight has taken place at the premises and the property has suffered damage as a consequence, this isn’t ‘malicious’ but ‘accidental’ – as the intent was not to actually damage the property.
A word about drug labs
When it comes to damage caused by tenants operating a drug lab from the premises… Acts such as cutting holes in ceilings, tampering with the meter box, installing security or re-directing plumbing, would usually be considered ‘deliberate’. Other damage could be ‘accidental’, such as the kitchen catching fire or the garage exploding. Damage could even be ‘malicious’, such as trashing the home in a drug-fuelled rampage.
EBM RentCover is one of the few landlord insurance providers that covers drug lab clean-ups, providing up to $65,000 to cover damage to the building and contents caused by meth labs or hydroponic set-ups.
*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 661 662 if you have any questions.