The Most Common Landlord Insurance Claims
A good landlord insurance policy is essential to the smooth running of a rental property. Although property owners tend to view the premiums as a necessary evil, it makes good business sense to have adequate landlord insurance.
It can save landlords from paying the penalties for many damaging events that can occur in a rental. However, when buying insurance, landlords should also endeavor to get the most coverage at the lowest premium.
They can do this by finding out what insurance claims property owners are most likely to make. And having known what these claims are, they should strive to avoid the risk of making similar claims.
What are the most common insurance claims that landlords make?
1. Loss of rental income
As with every business, owning rental property comes with a measure of risk. One of those risks is that tenants in a property may stop paying rents. This can happen if some adverse event makes the home uninhabitable and the tenants move out, as a result, or simply refuse to pay the rent. Examples of events that can create such a situation include storm, flood, fire or smoke. When a property becomes uninhabitable, the landlord's rental income stops, but their bills do not. This is why loss of rental income is the number one insurance claim that property owners make.
How to avoid it:
Most loss of rent claims come from events beyond a landlord's control. Property owners cannot do anything to prevent rainstorms or floods. What they can do, however, is limit the risk of man-made events which also lead to loss of rent, such as fire or smoke damage.
2. Water Damage
This results from damage due to the unintentional discharge of water. The common cause of the problem is faulty plumbing, poor plumbing maintenance, and tenants' negligent behavior. This problem is fairly common and very costly to fix. Water damage, if left undetected, can result in massive damage to a property.
How to avoid it:
The best way to solve water issues is to prevent them. The landlord should implement a regular schedule for thorough inspection of the home's plumbing. Tenants should be properly oriented on how to manage the plumbing. And the lease agreement should include clauses on the consequences of tenant-originated water damage.
3. Accidental damage
This claim results when items in the home, or some parts of the structure, are unintentionally damaged by occupants. This could be a case of damage to wooden floors, torn furniture, ripped-up carpets, or a broken television set. Accidental damage poses a risk to a rental property because it makes it less attractive to potential tenants and reduces the home's resale value.
How to avoid it:
Landlords cannot completely eliminate the chance of this happening but they can reduce it significantly. One way they can do this is by using décor that is durable and less likely to get damaged.
When installing fittings and fixtures, owners should prioritize hardiness over other qualities. A thorough vetting of tenants will also help to eliminate renters who are prone to engage in activities that increase the chance of accidental damage, such as parties.
4. Malicious damage
This is damage that is intentional. It includes things like large holes in the walls, kicked-in doors, cigarette holes in furniture or some other form of blatant acts. Most of the time, malicious damage is done by outsiders, such as, visitors to a tenant's apartment. It could also result from vandalism or burglary.
How to avoid it:
The best protection against malicious damage from criminal activity is to implement appropriate security measures. Installing window grills, burglar alarms, motion detectors, and bright lights around the perimeter can deter criminals.
Having sturdy locks on gates, doors and windows, as well as CCTV cameras on the premises will reduce incidences of malicious damage. And landlords should make it the tenant's responsibility to pay for damage caused by their visitors.
5. Weather damage
Storms and floods happen all the time. When they do, they often leave their mark on a property in the form of damage. In some areas, winter storms are the major problem, in others areas, the damage is caused by strong winds.
Floods can also be the cause of damage to a property. There is not much a property owner can do about these acts of nature, except to prepare for them and possibly reduce their negative impact on the property.
How to avoid it:
The part of a building most commonly damaged by storm is the roof. To protect against the probability of roof damage, gutters and downspouts should be maintained properly. Loose and missing shingles amplify the power of wind and water to damage a roof.
They should be repaired or replaced promptly. Raising air bricks around the property and keeping electrical sockets ground will help reduce flood damage. And when there is news of an impending storm, homeowners should take extra steps to protect the home.