Why PMs need to have the tough talk about landlord insurance

Congratulations! You’ve added a new property to your rent roll. You and the landlord are at the start of a relationship which will, hopefully, be long and mutually rewarding.

As we all know, that relationship can also be a challenge, with property managers potentially straddling the gulf between tenant and landlord when a tenancy goes pear-shaped.

Many landlords are under the happy illusion that having a quality property manager guarantees them no tenant-related problems.

It’s in your interest to set them straight and open their eyes to the benefits of a good landlord insurance policy, which covers accidental as well as malicious tenant damage, like RentCover from EBM Insurance Brokers.

Sometimes drama strikes even the most carefully-selected tenants. Burglars break in.  They accidentally drive into the mailbox. Their washing machine overflows...

And, of course, tenants’ circumstances can change –  if they fall ill or lose a job and end up behind on the rent.

Some landlords also believe they don’t need their own insurance because the body corporate has cover.

This isn’t correct.  Insurance taken out by the body corporate won’t cover anything that happens inside the four walls of the landlord’s own unit, including potential liability.

Property managers often avoid discussing landlord insurance with clients for fear of overstepping boundaries or complicating the situation.

However, industry professionals who sidestep the issue risk exposing their own business to legal claims.

These days, there’s a real risk of a lawsuit when something goes wrong. If you fail to make sure your landlords have liability cover in place, it’s not only the landlord left exposed but also you and your company.

In the absence of landlord insurance, lawyers can recommend suing an agency or property manager in addition to, or instead of, the property owner.

There’s also potential for owners to sue agents for failing to inform them of the protection available and the need for insurance – or to claim an agent was indirectly responsible for the problem.

It can be uncomfortable having the tough conversation with clients but, remember, they will be the first to thank you if disaster strikes and they find themselves protected because of your care and good advice.

Article provided by EBM Insurance. 

Sharon Fox-Slater is the General Manager of EBM Insurance's RentCover

Please contact 1800 661 662 or visit www.ebminsurance.com.au for an Australia-wide service.