BY CAROLYN MAJDA
The increasing popularity of strata-titled rental housing has made it more prudent than ever for landlords to do their research when selecting insurance.
Forecasts from the Australian Bureau of Statistics show that within the next 25 years, strata-titled apartments are likely to become a more popular living choice than residential houses.
While owning strata-titled property can have good rental income benefits for landlords, it does open up further questions about how to insure against all of the risks.
It is vital that landlords understand the level of cover offered to them by insurances such as landlord and strata as well as standard building and contents policies.
A standard building and contents policy won’t usually cover landlords for the specific risks associated with owning rental property.
These include malicious damage by tenants, many types of accidental damage, legal liability for occurrences on the property that cause death or bodily injury and loss of rental income as a result of damage to a property or a tenant absconding.
Every landlord, regardless of the type of rental property they own, should have a tailored landlord insurance policy that covers them for these risks.
In a strata-titled apartment situation, strata insurance is held by the body corporate and paid for by owners’ levies. Under a strata title, the body corporate is legally responsible for insuring the buildings at the strata-title site, as well as the owner’s legal liability for common property areas.
This includes insuring the roofing, external walls and the owners’ legal liability for shared walkways and garden areas. However, strata insurance cover usually doesn’t extend to cover the interior of individual units including internal wall coverings, curtains or removable flooring such as carpet or floating
This means that if a tenant damages the property or stops paying their rent, the landlord is very likely to be left out of pocket if they don’t have landlord insurance in place.
Confusion about the level of cover provided by strata insurance can also leave landlords at risk of legal liability claims.
Landlords need to be aware of the different types of legal liability claim. If a tenant or visitor injures themselves in a common area of the premises such as a shared walkway, any subsequent legal liability claim should be handled by the strata insurance.
But if a tenant or visitor injures themselves while they are inside a rented apartment, it is the landlord who can be found liable.
A good landlord insurance policy should provide legal liability cover of up to $20 million. Landlords who don’t have landlord insurance suited to the rental property they own really should think about how they would manage financially if they were faced with the types of claims that can arise from a strata-title ownership structure.
Carolyn Majda is Manager of Australia’s leading landlord insurance specialists, Terri Scheer Insurance. Terri Scheer provides insurance cover for landlords, helping to protect them against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income. For further information, visit www.terrischeer.com.au or call 1800 804 016.