Accidents happen. We are humans after all and as much as it is difficult to accept at times, not perfect.
A bowl or glass jar slipping from our fingers onto the kitchen tiles is something most of us have experienced personally (sometimes more than once).
And who hasn’t witnessed a wayward throw during a hotly contested cricket match in the backyard at some stage?
These seemingly minor accidents can sometimes result in damage to a property. A small chip in a tile from a Vegemite jar can easily be forgiven. In fact, it is reasonable to expect this type of damage will occur during a tenancy – it’s referred to as “fair wear and tear”.
And the responsibility for a broken window is pretty simple to determine – you break, you pay.
But what about if your renter forgets they have something on the stove and it catches alight? Then they panic and grab the pan to move it off the stove, dropping burning oil onto the floor when they let go of the hot handle, leaving a large trail of significant melted holes in very expensive vinyl between the cooktop and the sink (true story).
It’s still an accident. It is just a more costly incident than say a crack in a glass panel.
This type of situation is where things can get a little murky for investors. Even though the property owner wasn’t responsible for the accident, they may find themselves left with the clean up bill.
Most renters’ contents insurance won’t cover something like this and when the repair or even replacement cost is in the thousands, many people will simply not be in a position to come up with the required funds if an accident like this occurred.
And in our experience, relationships can quickly deteriorate if a solution can not be provided quickly or if the attempt at repair is not satisfactory.
This is why, as an investor, it is important to have the appropriate insurance cover to protect your property. Ensuring you have accidental cover under your policy, not just malicious damage is critical. You don’t want to discover, after an event such as the example we’ve used, that your cover won’t do what you thought it would.
Insurance companies are sneaky in that if they sell you a policy for your investment property, they often forget to point out that unpaid rent and renter accidents are not automatically covered. And the repair of accidental damage is always something we want to resolve sooner rather than later. We want to avoid the situation deteriorating to the point where we need to go to tribunal to work out who is responsible for what.
Because, as hard as it is to accept, at a hearing the Tribunal Member making the decision is generally going to rule in favour of the person with the bandaged and blistered hands, over the mean old property owner who is worried about the vinyl in the kitchen matching the rest of the house.
Malicious or deliberate damage by a renter on the other hand, is often much clearer to assign responsibility for which tribunal members and insurance companies prefer. Maybe prefer isn’t the right word, but it certainly makes their job easier.
Moral of our story – it definitely pays to read the fine print when it comes to your insurance policy.
