Landlords Insurance Claim Issues

boostpak on 07/04/2021 - 11:30

My cousin owns one property which he has been renting out for a few years to get on top of mortgage repayments (lives at home still) and was planning on moving into the property to live for good next year. Never had a single issue with the tenant, property always maintained well and all inspections fine, until covid hit…

Long story short his tenant caused a lot of internal damage to the property and he wasn't able to get the agent to do any inspections, reports etc as tenant refused and agent unable due to covid. Tenant finally moved out, now my cousin is left with all the damage to his house.

He always had landlords insurance with the property and decided to take out a claim, however has been in a battle with the insurer over covering the majority of damages as the insurer has basically told him that the damages denied were due to it being accidental, clumsy, irresponsible, failure to maintain property, wear and tear, unpremeditated damages and not malicious, deliberate or intentional type damages. So they are using their own interpretation to make exclusions to certain items.

Now their assessor was did a report for all the damages that came to around 25k worth of damages, which seems right as my cousin got 3 other inspections done that came to the same figure.

Insurance through exclusions/wording/interpretation are only willing to pay around 1/5 of the damages. My cousin has been really upset as you would be, no one deserves to have their house trashed and damaged. How can they say failure to maintain property or wear and tear when the agent/owner had no power to gain access into the property to see any issues, no power to evict tenant, tenant not communicating with agent at all. Also inspection done right before covid hit, house was in fine condition, no issues at all, insurer knows that yet still using wear and tear as exlusions.

Has anyone else had similar cases with landlords insurance where the insurer is trying to exclude items even when their assessor has stated the damages in their report.
What did you end up doing? Should my cousin consult a solicitor?

Financial Insurance

Comments

  • bobbified on 07/04/2021 - 11:33
    +2

    the insurer has basically told him that the damages denied were due to it being accidental, clumsy, irresponsible, failure to maintain property, wear and tear, unpremeditated damages and not malicious, deliberate or intentional type damages.

    You haven't mentioned what sort of damages we're talking about here. Things like holes in the wall aren't "wear and tear". Worn carpets, minor marks on the walls etc are.

    • boostpak on 07/04/2021 - 11:36

      holes in walls, broken smashed floor tiles, architrave indents big lines through them, broken joinery in kitchen, broken taps, wall tiles cracked

      • bobbified on 07/04/2021 - 11:39
        +6

        In that case, it doesn't sound like typical "wear and tear".

        Escalate it through the insurance company's own internal review process and then if you're still not satisfied with the outcome, escalate it through AFCA.

        • boostpak on 07/04/2021 - 11:41

          That's what has happened and he said internal reviews interpretation via photos etc agreed with initial response. He now has the option to go to AFCA, or he can contact a solicitor?

          • bobbified on 07/04/2021 - 11:46
            +6

            @boostpak: AFCA complaints handling is similar to VCAT and is designed so that you don't have to go through the expenses (and time) of hiring a solicitor etc to go to court. So that should be your next step. It can cost the company quite a bit when a complaint is lodged so sometimes just lodging a complaint is enough to make the company want to settle a smaller value claim (such as this one).

  • CheapSticks on 07/04/2021 - 11:49
    +1

    Can you pls PM name of insurance company ?

    Also, what is the agent's view on the insurance claim?

  • Drakesy on 07/04/2021 - 11:56
    +3

    $25k worth of damages, ooof.
    Definitely go through AFCA, sounds like the insurance company's doing the dodgy.

    But yeah, normal wear and tear may reduce down the costs, but that'll be open to interpretation.

    • boostpak on 07/04/2021 - 12:05

      seems like its a case of interpretation… going from nothing to extreme damages though… surely it's clear cut damages and not wear and tear. He's guttered. Of course insurance isn't going to give you the full amount ever, but totally excluding things using interpretation and other reasoning to change it to align with their PDS exclusions seems kind of dodgy.

  • WreckTangle on 07/04/2021 - 11:57

    I had to pay extra for the accidental damage add-on to my policy, did he get that?

    • boostpak on 07/04/2021 - 12:08
      +2

      Don't think that was ever an option so no he didn't have that add-on. Leaving that aside, how do they definitively know 100% if damages were caused accidentally or with malice? It's just their interpretation in order to exclude items.

      • WreckTangle on 08/04/2021 - 10:14

        Its been an optional add on every time i’ve bought LL insurance.

        Because if the company is saying it is accidental then, bingo…you would be covered.

        • kiitos on 08/04/2021 - 11:29

          How much extra is the option, and what's a ballpark for the premiums? (I guess it varies widely based on house value)

  • BOGOF on 07/04/2021 - 12:10
    +1

    Who is the insurance company?

    • boostpak on 07/04/2021 - 12:11
      +1

      not sure I should name them

      • Drakesy on 07/04/2021 - 12:12
        +8

        do it

      • Quantumcat on 07/04/2021 - 12:55
        +2

        Please tell us so we can stay away

      • [Deactivated] on 07/04/2021 - 13:26
        +2

        Why don't you name every big insurance company you can think of that's not it

      • jv on 07/04/2021 - 13:38
        +3

        not sure I should name them

        Why not?

        If what you say is true, there is no problem with naming them.

        I would not want to use them in future.

      • BOGOF on 07/04/2021 - 13:50
        +4

        Name them!

      • SlickMick on 08/04/2021 - 20:42
        +1

        What kind of a society do we live in where we don't feel like we shouldn't warn others of businesses not to be trusted

        • peter05 on 09/04/2021 - 13:32
          -1

          OP is probably more concerned about the potential legalities and what the company in question might do, however as JV has pointed out above, if it's all true then there are no issues

  • brendanm on 07/04/2021 - 12:15
    +1

    Did the agent take pictures at the last inspection they did?

    • boostpak on 07/04/2021 - 12:39
      +1

      agent had done full reports which covered all aspects of the property. Insurance is happy with the reports no issues there, it's their interpretation of the damages that is causing the exclusions for the claim.

  • pharkurnell on 07/04/2021 - 12:18

    Current Affair would love this…

    https://9now.nine.com.au/a-current-affair/tell-us-your-story

  • Fredfloresjr on 07/04/2021 - 12:19
    +3

    Used to be my friend, now became my cousin. Hope OP get this one sorted.

  • boostpak on 07/04/2021 - 12:40

    Surely someone on here has gone through something similar with insurers

  • godofpizza on 07/04/2021 - 12:50
    +1

    has the PM taken any of the bond the tenants had to cover the damages? what have they done to help?

    • Quantumcat on 07/04/2021 - 12:55
      +1

      The bond would probably barely cover the excess

      • godofpizza on 07/04/2021 - 12:56
        +3

        still, it's a start and better than nothing.

        If the REA let the tenant leave without taking their bond. I wouldn't be too pleased that they did enough to look after the interests of the landlord.

      • boostpak on 07/04/2021 - 12:56
        +1

        ^^this

  • cille745 on 07/04/2021 - 12:57
    +1

    Jesus. 25k for some dented architraves, broken tiles and some holes in the wall? Whoever's given those quotes must be making an absolute killing

    • boostpak on 07/04/2021 - 12:59
      +4

      There's obviously more then just that, but replastering lots of walls making them structurally sound, repainting all of those walls, you're not just doing one coat either. Ripping out existing tiling floor and walls over large areas, it doesn't just happen in a day, ripping out joinery bench top etc. Replacing them all, sealing them all. There's also clean up fees they include too. Doesn't all come out of thin air for a couple grand.

      • godofpizza on 07/04/2021 - 13:02
        +4

        depends on where the tiles are, if they were in wet area then the whole area needs to be waterproofed again. Not just the tile that was broken.

        Also demoing the area ( if there's asbestos) cost money too.

        • boostpak on 07/04/2021 - 13:08

          exactly

  • netjock on 07/04/2021 - 14:05

    Definitely name and shame then take them on. Pretty much paying insurance for no coverage.

  • Trying2SaveABuck on 07/04/2021 - 14:48
    +1

    Without even knowing you i reckon the insurance was EBM they are f**ken hopeless

    Take it to AFCA - if it really is holes in the wall etc then i reckon you got a good case - it is a lot of headache and you probably wont get covered for any losses in earnings whilst the house in unrentable but your cuz should win this

    LL insurance these days is a bit of a dogs breakfast you almost need to be a lawyer to understand some of the PDS fine print - the fact the law hates landlords in general also doesnt help - the tenant responsible can walk away scott free whilst the LL and the insurer are left to pick up the tab of their neglect - the system is broken

    Note: im only hearing one side of the story, but i have heard this from so many LL in the past it pisses me off and people wounder why the far right are so popular

    • Bob Svargis on 08/04/2021 - 07:06
      +1

      I agree re: EBM. Disgraceful and I will never use them again.

  • Traveller107 on 07/04/2021 - 16:28
    +1

    I'm going through some similar at the moment.
    The problem is that the landlord insurance covers ONLY malicious damage by the tenant. Not any other damage. So its a near impossible uphill battle trying to prove damage was malicious otherwise it's not covered.
    I remember the days when all damage was covered but seems like most insurers are changing that to malicious damage to get rid of any responsibility.
    I'm looking for an insurer that still covers all damage and will change my insurer this week itself.
    I feel bad for your cousin as he might have to take the tenant to qcat to recover any payment for damages and foot the bill himself in the meantime. Being an investor is becoming a punishment these days.

  • Cheeper on 07/04/2021 - 17:27
    +1

    With the cost of getting building repairs done these days the bond amount is a joke.
    If it was more tenants would be more respectful of the property.
    Good luck with getting it sorted OP but if the policy T&Cs stated accidental damage only your friend may have to wear the cost.

    • SlickMick on 08/04/2021 - 21:18

      +1
      Can only take 4 weeks rent. Can't require rent in advance. How many weeks does it take to evict someone?
      A bond can't even cover recovering rent owed, let alone any damage.

      I reckon a tenant should need to mortgage something or take out an insurance like mortgage insurance so the landlord has assurances like banks with purchases.
      being a landlord to random tenants sucks

      no wonder some landlords like to have contacts in bikie gangs

  • Bob Svargis on 08/04/2021 - 07:05
    +1

    I had massive issues with EBM insurance some time ago. Refusing to pay claim, wouldn't cover multiple damage instances and then had the nerve to delay payment due to "the phone lines being down with our insurer" As an IT guy, I called them out on their BS but it was a very unpleasant experience.

    What helped me was the insurance complaints commission, although that's an industry body so they are a bit soft.

    • godofpizza on 08/04/2021 - 09:09

      why do LL choose EBM, where they cheaper than what on offer?

      • Bob Svargis on 08/04/2021 - 09:31
        +1

        At the time it was easier for me as the property agency bundled it all up and being busy at the time, it was easiest to opt for them. I bet that's how they get 80% of their sales.

        And yes, they were price competitive at the time (and my agent recommended them… however after my claims experience, I suspect that they changed that recommendation :-)

  • yeahrowdyhitthat on 08/04/2021 - 10:19
    +1

    There are a few things to consider.

    The reality is the policy will cover Malicious Damage but not tenant neglect, most accidental damage, and gradual deterioration or wear and tear.

    Side note - the latter is what a depreciation schedule allows for and should have been done so that such costs can be taken into account come tax time.

    Marks or chips on walls? Not malicious. These are a bond matter.
    Cracked tiles? More likely an installation fault or building movement. Unless they look like something has been smashed against them (impact dent with radiating crack) then these don't sound malicious.
    Holes in walls? If they've been punched, clearly malicious. If you're talking small holes from say moving furniture, this is not malicious.

    For anyone here to comment in detail we would need to see photos and all the reports.

    At the end of the day the PDS will say what is covered and what is not. Assessors and builders can only rely on experience and visible evidence when reporting on damages after the fact. They weren't there, and neither was the owner.

    But, for the most part malicious damage looks significantly different to accidental damage or tenant neglect.

    The system is skewed against landlords here as the bond is never enough to cover such repairs, and court orders requesting tenants pay costs aren't worth the paper they're written on.

    • boostpak on 09/04/2021 - 08:57

      So whether the tiles look like an impact dent with radiating crack (which there is no mention to in the PDS) how does ones property tiles go from perfectly fine no cracks whatsoever, to then during the 6-9 month covid period cracks in multiple multiple tiles and wall tiles too. Where is the proof that this ISN'T malicious? Just because they interpret it not to be and use any excuse and wording, doesn't mean it wasn't damaged maliciously. You can crack tiles in all sorts of ways by using force, it doesn't have to have a clear impact dent. Insurance is there to cover for these unfortunate events like tenant damages. I feel my cousin has a case and it's pretty clear cut since there's no way to prove it wasn't maliciously done. Going from a good nice home internally to fully damaged you can tell there's been malicious behaviour and it's not neglect, accidental, clumsiness, moving furniture etc

  • Darayus on 08/04/2021 - 10:32
    +1

    I am victim of tenant damage for 3 times for same property at St. Mary's. Tenant had done burn his stolen bike in backyard, smash windows, broke the false ceiling, brought the gung up in room and damaged TV sets and smash the TV panel. drop the kettle bell on ceramic tiles, punch the door inside the Gyproc wall and make a big hole. Punctured the water pipe after the meter and i have to pay water bill of $ 3K. put the plastic bags in toilet and block the toilet. crack the toilet pan, burn the kitchen top with blow torch. Pee on carpet in bedroom. He was ice addict and his GF left and so he went on rampage. Did not paid rent for 6 weeks and after tribunal given order in our favour, he ask tribunal to allow him to stay for another 3 weeks to organise new place, so that also rent free. Called the sheriff and vacate the premises, so i was out of rent for more then 16 weeks.

    It cost me more then 4 K and 4 truck load and 6 people to empty the whole house, I was out of pocket for more then $ 40K as no one can occupy the premises without getting complete redone. Insurance surveyor attended and he commented he has never seen such kind of damages in his career of 25 years, the guy has done but unfortunately my LL insurance AAMI only accepted claim of $ 5K, leave aside they did not even paid me filing fees to sheriff and tribunal as legal fees are not covered.

    I just bite the bullet and borrowed money from bank on equity and spend more then a month to get fixed by various tradies to get the property up and running.

    New tenant came in with family of husband and wife and 4 kids. They stayed for another 5 years, the family broke up and everything went down the drain. Again got tribunal and got the property vacate but that guy just left the house with all the mess and junk for me to remove. They broke the wooden stair case, broke the stove top and smoke exhaust got jammed with oil fumes not cleaned for years.

    Again same story spend another $ 5K to clean and 3 truck load and 90 bags of clothes & shoes donated to vinnies, luckily this guy did not broke the wall but left wall with kids drawings, ink on carpet, broken toilet pan, leaking tap that cost me Sydney water bill for $ 2K and cockroaches that took pest 4 visit and $ 600 to eliminate cockroaches.

    This time TS was generous and managed to pay 70% of repairs invoice but nothing for cleaning, water bill, painting of walls so again out of pocket by $ 18K.

    you will ask what REA was doing, they were taking picture and letting us know that cockroaches are there and wall has marks. So guys you are lucky if tenant leaves the property atleast livabale and get the another tenant in rather then sometimes i read report that tenant has left marks on doors and scratches and expect property to be upto date even he had occupied for 5 years.

    • WT on 08/04/2021 - 11:53

      speechless. I guess the area brings some chance of bad tenants, but dam!

    • Lunarboogie on 08/04/2021 - 13:23

      Sorry to hear these stories but unfortunately these are the risks with being a landlord. For most of us, these cases are outliers but it serves as a reminder to really think hard about who to let your property to and vet, vet and vet again. Get good tenants in and your life will be a lot easier.

    • godofpizza on 08/04/2021 - 13:41
      +1

      god dam. Wouldn't the first tenant be up for malicious damage?

    • boostpak on 09/04/2021 - 08:58
      -1

      Did you ever get solicitors help with the insurance claims?

      • Darayus on 09/04/2021 - 09:40
        -1

        i have no intention to add another cost to pay solicitors.

        All LL policy are very clear with thier T&C and they always refer to why this claim has not been accepted and you cannot do anything with it.

        Also LL policy for $ 340 is not that much atleast they help to take major share of loss and its a good investment even if you are having a great tenant,

        • boostpak on 09/04/2021 - 09:54

          when it comes down to wording and interpretation, a lot can be done and if solicitors get involved insurers usually come to some sort of agreement as they don't want to have to go to court and possibly lose and bear all the costs

  • CheapSticks on 08/04/2021 - 14:10

    Which is the best landlord insurer? Terri Scheer? Others?

    • boostpak on 09/04/2021 - 08:58

      I feel there should be some online forums about which is best for landlords

    • Darayus on 09/04/2021 - 09:43

      i had TS & AAMI, AAMI was worst and that i realised as they had many exclusion and sub limits which has not major value.

      TS, EBM are the good LL insurance.

      Also ensure you ask your REA to renew tenant agreement, because if tenant left without unpaid rental then LL insurance will not cover unpaid rent amount as they cannot recover from your tenant.

  • Noblejoker on 08/04/2021 - 15:12

    Most Landlord covers require tenant damage to be 'deliberate and mailicious' with the intention of excluding wear and tear, maintenance claims
    An accummulation of small damage which eventually adds up to a butt ton of damage is not 'deliberate and malicious'

    Let's put the blame where it belongs - on the tenant
    Has your Friend/Cousin taken the matter to court?
    There is no reason he can't get a judgement against the tenant for this documented damage
    Depends on tenant circumstances how much of the funds he will receive and how quickly

    I would also be asking the Agent what they were doing about it
    Lodge a claim under their insurance for 'mismanagement'
    Agent keep taking the money for managing the proerty whether they can do the inspections or not
    They should at least have a case to asnwer to justify they did all they could to avoid the situation and communicated that to the owner
    If they couldnt access the property did they commence proceedings to evict - if not immediately due to COVID, then when they could?

    This is why you should choose excellent RE Agents who heavily vet the tenants and communicate well with them

    • boostpak on 09/04/2021 - 09:05

      The agent tried multiple times every week to contact the tenant via email, phone, sms. They were physically unable to go to the property. The tenant would reply every so often only via text. His messages would not make any sense, he would sometimes claim he's dealing with mental health, then claim he's dealing with family issues, then claim all sorts of other things. My guess is it was drug related, he had rage inside the house and caused damages, had parties caused damages etc. The agent (THANKS TO THE GOVT) had no power to evict the tenant, or do inspections during covid. The tenant was not paying rent also, so the agent was always trying to communicate, but he would just ignore or come up with excuses. The world we live in when a govt puts in a moratorium.

      Therefore the insurer can't put things like failure to maintain property or wear and tear as an excuse as there was no ability to access the property at ALL. My cousin has engaged with solicitors now, so hopefully they can do something about it. Cousin has been living with me and was wanting to move into his house next year some time, now this has happened. You'd think you have insurance for a reason like this, but I guess not. They just take your money.

    • Darayus on 09/04/2021 - 10:10

      To me all agents are same when problem starts floating.

      REA has young school kids as property manager who has limited knowledge of how to get things sorted.

      They keep sending request for minor repairs n leaks and ask plumber & electrician to fix the issues which can be sorted by handyman.

      There is a very thin line between general wear & tear and malicious damage unless there is enough evidence. Even crack on tiles if they are old then insurance companies will say that its wear & tear unless you have enough evidence that its malicious damage. that why keep records of every thing for your property and take picture from all angles at every time the property to provide evidence that property is in good condition.

      • boostpak on 09/04/2021 - 13:23

        These problems came about while agents and landlords had no power. Agents were unable to enter properties, do their scheduled visits and reports, unable to evict. So while in normal circumstances what you are saying is right, however things like neglect and failure to maintain property are not really valid by the insurer under the covid lockdown situation. I think you definitely should have engaged in a solicitor and your outcome could have been different.
        You said you have no intention to "add another cost to pay solicitors" yet were happy to fork out another 40k in one instance to fix the damages caused by the tenant. A solicitors costs may have been 500-2k, what's that in the grand scheme of things if the possibility of getting 10k back in damages is there. The solicitor will fight and get some of those damages paid out. The insurer is always going to interpret things in their favour and change things to suit their T&Cs, that's their job. I think you stuffed up there mate.

        • peter05 on 09/04/2021 - 13:42

          Not invalidating the rest of your post but i truly think that in the circumstances that you have described, getting out of it with only a $500-2k in solicitors bill would be ridiculous and unimaginable. Realistically I feel it would be minimum $5k for them to take on a task like this. Remember you are expecting them to represent you so every phone call and correspondence they make to the insurance company will cost you money, in addition to all the document preparation and so on they'll be doing in the background

          • boostpak on 09/04/2021 - 13:47

            @peter05: I really don't think it's that complex of a task to handle at all.

          • boostpak on 09/04/2021 - 13:49

            @peter05: what you 'feel' and what is reality are two different things.

Login or Join to leave a comment
Login Join