Ball through windowA matter of intent

When it comes to insurance claims for damage, not all damage is created equal. The intention behind the damage could mean the difference between being paid-out or having the claim declined.

Damage is damage, right? Not when it comes to insurance. Different insurers treat the different types of damage differently and knowing the differences can mean the difference between a successful claim or not.

There are three categories of damage considered by insurers: accidental, deliberate/intentional and malicious. And damage cover varies amongst insurers and not all cover each type – in fact, many exclude one or more (and may or may not cover both the building and contents). Importantly, insurers also differ in how they define each type of damage, so it is imperative that the policyholder understands what the insurer considers to be ‘damage’ in general and specifically under each type. 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. The three types are illustrated through RentCover claims examples.

‘Accidental’ damage’ is damage that has resulted from an unforeseeable or unintentional event; that is, the damage was not caused on purpose. It is sudden and unexpected damage to property and should not be confused with general wear and tear which occurs over time which is not covered by insurance.

Common examples are wine spilled on carpets, gouges in walls from furniture clipping them, balls through windows or tiles cracked when heavy objects fall on them.

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.

RentCover policies do cover accidental damage, some examples are below:

Claim example 1:
Tenant was cooking and accidentally placed a hot pot on the benchtop, causing a burn in the laminate. The $3,100 cost to replace the damaged benchtop was paid.

Claim example 2:
Tenant fell into arrears and vacated the property. When the agent did the final inspection they found multiple stains on the carpets throughout the house, the blinds were broken in places, 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 to the kitchen benchtop, hair dye stains on the en-suite vanity, and torn flyscreens on some of the windows. The $17,430 accidental damage claim was settled.

‘Malicious damage’ is often where there is the most confusion amongst landlords, who may think the damage caused by tenants was ‘malicious’ when in fact it was ‘deliberate’. In order for the damage to be considered malicious, there has to have been ‘malicious intent’ behind it (carried out with vindictiveness or spite); that is, the tenant must have been motivated by malice and intended to cause damage (proving this can sometimes be difficult). This type of damage can also sometimes be considered criminal damage, which can incur heavy penalties including fines or imprisonment for perpetrators. Incidents of malicious damage should be reported to police, especially if the policyholder intends to lodge an insurance claim.

Common examples are tenants punching holes through doors or kicking holes into walls, smashing windows or ripping out fittings and fixtures when the relationship with the landlord or agent turns sour.

Despite being a common reason for making a claim, without the right insurance in place this type of damage may not be covered or may only be covered when the result of a burglary or act of vandalism, and not when carried out by the tenant or another person legally on the premises.

RentCover policies do cover malicious damage by the tenant, an example is below:

Claim example:
During a domestic violence incident at the property, one of the tenants used a firearm to shoot through walls, with the bullets causing damage to the bathroom tiles and vanity. The tenant also took a knife and threw it at the walls and used it to hack the kitchen bench. There were punch holes to doors throughout the property as well. The $18,500 in repair costs was paid.

When a tenant damages/alters the current state of the property ‘on purpose’, but without malicious intent or by accident, it is generally considered ‘deliberate’. “Making the place our own” is often the motivation behind the redecoration or modifications made without the owner’s consent, yet the intention is not specifically to cause damage.

Common examples are where tenants have put holes in the walls to hang pictures, removed blinds, repainted or taken up carpets or flooring.

This type of cover is often excluded by insurers. At RentCover, claims for damage deliberately caused by tenants are assessed on a case-by-case basis and may be considered as ‘accidental’. Some examples of successful RentCover claims are below:

Claim example 1:
Tenant had been in the property for about a year when they fell into arrears and evicted. When the final inspection was carried out it was found the tenant had put small holes in the walls, eaves and gutters in order to install security cameras at the property. While it wasn’t the intention of the tenant to damage the property, they had deliberately installed the cameras. A claim for $1,050 was paid to cover the cost to remove the cameras and wiring and reinstate the minor damage to the property caused by their installation.

Claim example 2:
Tenant had been living in the 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.

The tenant’s intent behind the damage can be the difference between a claim being paid or not – so it is important for the policyholder and agent to understand what types of damage are covered, which are excluded and the limitations of the policy.

BTW: Even though an insurance policy may cover the cost of accidental, malicious or deliberate/intentional damage, the tenant is ultimately liable for paying for the repairs, so it’s a good idea to notify the tenant if the landlord intends to lodge a claim so they know they will be held financially responsible for ‘making good’. After settling the policyholder’s claim, RentCover will generally pursue the liable party through debt collectors or the courts to recover costs.