It goes without saying that property managers should take all the worry and hassle out of the rental process for their clients.
So, what is the difference between an average PM and a great PM? Well, it is in the details! And there are common characteristics that set PMs apart in the eyes of landlords including exceptional communication skills, value for money, professionalism and experience, proactive management, best use of tech, flexible and backed by a great team.
But from an insurer’s perspective, there are nine characteristics that make for a practically perfect PM (and no, it doesn't involve a spoon full of sugar):
1. You understand the value – and role – of specialist landlord insurance providers
For many PMs, it’s best-practice to discuss the financial risks a new landlord may face and how to manage these risks with a comprehensive landlord insurance policy. From fire and flooding to rent default and malicious damage, landlord insurance can offer extra protection when things go wrong. While landlord insurance is not a substitute for good management, is it a financial safety net for unforeseen instances.
When making landlords aware of the importance of protecting properties, it is vital all PMs understand the value and need for a quality landlord insurance policy (and highlight to landlords not all policies are the same).
A great PM will also advise tenants there is renters’ contents insurance available to protect their personal belongings (a landlord’s policy does not extend to the belongings of their tenants – a fact many are not aware of, leaving them financially exposed).
2. And your role in providing it
If you are a distributor, authorised representative or referrer of insurance products, it’s important you know what your obligations are under the financial services legislation – what you can and can’t say and the dos and don’ts. Depending on the arrangement you have with the insurer, your actions could impact their financial services licence or you could even end up in legal hot water. Often you will act as the middleman between landlord and insurer, so being on top of policy inclusions and, importantly, exclusions will help make the claims process easier.
3. You know the rights and obligations of landlords and tenants
Having the licences to practice is one thing – being up to date on legislation that governs rental properties in your state/territory is another. And when it comes to landlord insurance, it’s important for the PM to know the ins and outs of rental laws when it comes to tricky matters like evictions. If a PM is not aware of the rights and responsibilities of all parties when it comes to terminating leases, any claim the landlord may need to make on their insurance can be delayed or even jeopardised.
4. You’ve got the tenant vetting process down to a fine art
Tenant selection is a key responsibility for PMs and failing to properly screen potential renters can have devastating impacts on landlords. If you allow ‘bad tenants’ into the investment property, chances are your landlords are going to have a few angry questions for you to answer. There’s also a good chance they will have to make a claim on their landlord insurance for anything from rental loss to total property loss (for example, if the rental blew up from a drug lab being run inside). While the landlord’s insurer is likely to compensate the landlord for their losses, if it is found you were negligent in your duties, you could find yourself being sued for compensation by the insurer (insurers generally have the right to pursue damages from the party responsible for losses).
5. You’re on top of rental arrears
Loss of rent is the most common claim made by landlords on their insurance policies. Left un-managed, the costs can quickly blow out, potentially leaving landlords and PMs out-of-pocket. There are also obligations under insurance cover to minimise losses and being tardy in chasing up arrears could impact any claim for loss of rent.
6. Property maintenance is your middle name
Ensuring repairs are made within legal timeframes and the investment property is properly maintained not only keeps tenants on side (and landlord compliant with laws) but helps to protect the insurance. There is a clause in practically all building insurance policies that relates to maintaining the premises. Failure to do so could mean a claim won’t be paid. When you are contracting tradies to undertake repairs or maintenance, ensure they have their own insurance and appropriate licences in place.
7. You can sniff out liability issues at 20 paces
Safety and security at the rental are paramount. Once you’ve properly screened tenants and ensured a solid lease arrangement is in place, you need to keep the landlord fully up-to-date on the condition of the property at all times in order to minimise liability risks. Conducting regular property inspections thoroughly and carefully, fully documenting inspections and providing landlords with inspection reports is necessary to be on top of any existing or emerging issues that could pose a liability. Not only should you make sure landlords are aware of potential dangers on the property, but also notify tenants of any safety issues in writing – and rectify them immediately.
8. All the properties on your rent roll are insured
Even though there’s no legal requirement for landlords to have landlords’ insurance, PMs should consider making sure everyone on their rent roll has landlord insurance. Doing so is good practice as landlord insurance can minimise risk all round. As a PM, your job is easier if your landlords have the right insurance. A good policy covers things like loss of rent, time spent at tribunals, legal expenses and any damage caused to the rental property. Importantly, there is usually public liability cover in landlord insurance, which protects landlords and also PMs.
9. You’re insured
A good PM knows there are a wide variety of risks in their work and as their portfolio grows, so does the number of risks. It is important PMs and real estate businesses invest in tailored insurance to cover the long list of threats that come with working in the property industry including professional indemnity (PI), cyber cover and scalable business insurance. Specialised brokers can even work alongside real estate businesses to recognise risk, develop complete insurance programs and implement solutions to ensure peace of mind.
Example (PI insurance):
PI insurance can help protect you in the event you are accused of negligence. Typically, PMs find themselves under scrutiny for failing to:
- execute a written management agreement and make sure that the property owner has a copy;
- inspect the property before, during and after occupancy and document inspections;
- keep the owner fully advised on the condition of the property;
- use effective, internal systems to monitor rent collection;
- understand the relevant legislation.
And PI insurance would typically offer cover in these situations.
At EBM RentCover we recognise PMs play an important role in helping landlords protect their investment property, and one of the ways they do this is through insurance. That’s why we aim to offer reliable solutions to help PMs, landlords and tenants feel confident they are well protected by insurance. And why we are there for our property partners, providing support from cover to claim.
*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 861 151 if you have any questions.
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