What is a landlord’s idea of a good tenant? Is it someone who regularly maintains the upkeep of the garden or is it someone who is conscious of not spilling wine on the new carpet? Surprisingly, it’s not only malicious tenants who can cause property damage to a landlord’s life investment.
Research from Terri Scheer, Australia’s leading specialist landlord insurance provider, has seen a spike in property damage caused largely by accidents, and by good tenants. Damage is normally associated with malicious circumstances and not normally connected with ‘good’ tenants, yet their research has shown even the best tenant can cause accidental damage to a property.
Terri Scheer figures show a 34 per cent increase in the frequency of malicious damage claims paid over the period from 2010 to 2011, and a frequency increase of accidental damage claims by 46 per cent over the same period.
The average size of malicious damage claims increased by 3.6 per cent over a 12-month period between 2010 and 2011, yet the average size of accidental damage claims was much higher, showing an increase of 16 per cent.
What is considered accidental damage?
Accidental damage is caused by a sudden and unexpected event, such as:
The difference between accidental and malicious damage is when the property is subject to destruction by a tenant out of spite or ill will.
What is considered malicious damage?
Despite accidental damage claims increasing at a higher rate, malicious damage still remains a more common type of claim. Malicious damage is often more extensive than accidental damage and more likely to be spread over a number of rooms. In addition, malicious damage claims are often accompanied by claims for loss of rental income during the time it takes for the damage to be repaired.
In some instances Terri Scheer has paid claims as high as $40,000 to repair damages to a property caused by an angry tenant. Their research has also shown the average value of individual malicious damage claims is 27 per cent higher than claims for accidental damage.
Are there other types of damage landlords need to be aware of?
Deliberate damage is an act that will alter the current state of an item, however the act is carried out without any spite, malice or vindictiveness. An example of this is putting picture hooks into walls without permission. This is not a vindictive act, but it is a deliberate action generally made with the intent of making the property more homely.
Wear and tear occurs naturally and inevitably because people reside in the property, and is just as likely to happen in an owner-occupied property as it would in a rental property. These types of damages include scuff marks on walls, worn carpet in walkways, and markings and dents on vinyl flooring.
How can landlords reduce property damage?
If landlords regularly schedule property inspections they will be able to swiftly uncover damage to their property and will be able to rectify any problems with a quick turnaround.
Rental properties with pets or children should also be flagged with regular inspections due to ongoing cosmetic damages that may have occurred during the rental period.
Appointing a property manager is another way of avoiding short and long-term property damage as they can help to choose the right tenants and manage the property with regular inspections.
Ensuring your rental property is protected from different kinds of tenant damage could mean reviewing or switching to a new landlord insurance policy.
Source: Terri Scheer insurance