A fire in an investment property proves the importance of landlord insurance
A little while ago, I shared a story with you about a fire that substantially damaged one of our rental properties.
The story overall is a little sad. The owners were away on holidays, enjoying a summer break with their children, so it wasn’t until a few weeks later when they returned that we were able to let them know what had happened. I suppose this is a great example of why it’s so important to let your property manager know when you go on holidays.
The tenant, after he moved into the other property we arranged for him, was severely injured in a motorbike accident. He is still recovering in hospital and will never live the life he once had.
It’s now more than two months down the track, and the rebuilding of the property is coming to an end. The new kitchen has been fitted, the ducted heating has been replaced, the walls and ceiling replaced and repainted where required, all the electrical wiring checked and the windows replaced.
We are in the final stages of choosing the carpet colour and new blinds for the property and getting things ready for the releasing of the property again.
The property manager, Courtney, has continued to co-ordinate access for the tradespeople on behalf of the owners’ corporation. She has also continued to ensure our owner was updated on a regular basis.
There are several aspects of this story that investors really need to think about.
Firstly, the owners have not received any rental payment throughout the past few months, and while yes, they will receive loss of rent income from the owners’ corporation insurance policy after the claim is finalised, processed and then a payout made, the challenge is managing their own cashflow during this time. It’s been tough for them!
Secondly, if the owners had not had a current landlord insurance policy in place, they would have had to pay for replacing the carpets and blinds, at a cost of about $2,100. The owners’ corporation’s insurance policy has co-ordinated the rest of the rebuilding process.
So the next time your property manager asks you “Do you have a landlord insurance policy in place?”, I hope you remember this event and the circumstances that occurred and were through no fault of the owner.
Leah Calnan is the director of Metro Property Management in Victoria and is the chairwoman of the REIV Property Management Chapter.