Cyclone Debbie – a lesson in why landlords need specialist cover
The $1 billion plus damage bill from Cyclone Debbie made headlines. But what about the cost for landlords who lost their rental income?
When Cyclone Debbie wreaked havoc across Queensland and northern NSW in March, it left in its wake a wind, flood and storm surge damage bill topping $1 billion. The category-4 cyclone resulted in more than 56,000 insurance claims being lodged, according to the Insurance Council of Australia. The majority of claims were for home and contents, motor vehicles and other property damage, with international catastrophe insurance data firm PERILS estimating the insurance bill at $1.12 billion.
When Debbie struck, it was the eighth declared catastrophe in Australia since the start of 2016, adding an extra $1 billion to the $1.27 billion in damages already recorded. But there was a figure missing from the statistics – that of rental income lost by landlords.
At RentCover we received around 150 claims with a total value of approximately $750,000. But unlike those with standard home and contents/building cover, our policyholders were also able to claim for rent losses.
Even though the property of one policyholder suffered no damage, the owner was left out of pocket. The landlord’s holiday rental is situated in the Whitsundays and when the island bore the brunt of the 260km/h wind gusts surrounding infrastructure was damaged and access to the island was cut. So although the property was physically unharmed, the landlord was unable to lease the property because holidaymakers couldn’t get to the island.
As the policyholder had specialist landlord insurance with cover for loss of income due to Prevention of Access, a claim for lost rental income was able to be lodged. The claim covered the time from when the cyclone struck until such time as access to the island and the property was reinstated. RentCoverShortTerm provides up to $50,000 in lost rental income if access to the property is not possible (RentCoverUltra and RentCoverPlatinum include up to 52 weeks’ cover).
Another policyholder was not so lucky when the roof of their Mackay house partially blew off and rain poured into the home causing extensive internal damage. Due to the storm damage, the home was uninhabitable and the tenants were forced to leave. The repair bill for damage to the building and interior topped $70,000 and the owner was also able to claim loss of rental income.
RentCover provides up to $65,000 for damage to property contents (the contents the landlord provides in the premises, not tenant possessions) resulting from defined risks such as fire, flood and storm. Policyholders with RentCoverPlatinum or RentCoverShortTerm with building cover can also claim building damage costs up to the sum insured.
Importantly, specialised landlord insurance provides cover not only for damage to a property but also for loss of rental income when disasters strike. Without this cover, many landlords could face extended periods of financial hardship if their investment property is severely damaged or destroyed. It’s extra protection simply not provided by standard building/home and contents policies.