When does a landlord policy cover the building?

When does a landlord policy cover the building?

9 October 2020

By Daniel Rooney

It is easy to assume that a landlord’s policy would cover any damage caused by a tenant, no matter where this has occurred. This is the perceived intention of a landlord’s policy and how a claim should be paid in the event of damage, right..?

Unfortunately, it is not quite this straight forward and the way an insurance policy triggers a claim can be quite confusing. All policies differ slightly, however, they have very similar foundations and intentions.

Let’s start with the basics

There are two main options available through a landlord’s policy. These are ‘contents only’ and ‘building and contents’. It is important to note that on a ‘contents only’ policy, there is no cover for damage to a building if it is caused by a tenant. It is also common that if the building is insured through a separate ‘home and contents’ policy, damage from tenants will likely be excluded unless it has been disclosed to the insurer.

To help clear up how a landlord’s policy should be established here is a brief description of what ‘building and contents’ means. Please note these do differ for all policies and so we recommend reviewing the relevant policy wording for a better understanding.

BUILDING: Cover can include anything permanently fixed to the house or structural. This can include fixed coverings on floors, walls and ceilings and fixed appliances that are permanently connected – e.g. electrical, gas or plumbing systems.

CONTENTS: Cover can include fittings, furniture, carpet, curtains, blinds and drapes, household goods and furnishings, swimming pools and spas, not permanently fixed.

When the insured address is in a building covered by a strata scheme, the definition of ‘contents’ can be expanded to provide cover for items not insured by a body corporate as defined in the applicable strata legislation; this is how the RealtyProtect policy has been designed.

At RealtyProtect, we would always recommend having the building insured on the landlord’s policy as this can avoid confusion caused by managing a claim through two separate insurance policies, and running the risk that building damage from the tenants may not be covered under a standalone building policy.

If any of your landlord clients has a question about the cover provided by the RealtyProtect policy,  you can send them a link to this article and also suggest to your clients that to contact RealtyProtect on 1300 406 877 to discuss more information about coverage.

We thank Marsh Advantage Insurance for supplying this article.

Cover is subject to the terms, conditions, limits and exclusions of the Policy. Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238369) (MAI) are authorised under a binder agreement with the insurer, Chubb Insurance Australia Limited (ABN 23 001 642 020, AFSL 239687). MAI has sub-authorised Victor Insurance Pty Ltd (ABN 11 146 607 838) (Victor) as underwriting agent to issue the Policy. To distribute the Policy, MAI sub-authorises The Real Estate Institute of New South Wales Limited (ABN 51 000 012 457, AR 1260666) (REINSW) as an Authorised Representative, and real estate agents as Authorised Distributors. MAI, REINSW and the real estate agents do not act on your behalf. Any advice provided is general advice only and does not consider your objectives, financial situation or needs. Real estate agents cannot provide advice regarding the Policy. Consider the Product Disclosure Statement, the Key Facts Sheets and the Financial Services Guide to decide if this insurance product is right for you.

The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. MAI cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk.

© 2020 Marsh Advantage Insurance Pty Ltd

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