Landlord Insurance ?

Question

Hi
In Australia, we have a "Landlord Insurance" policy that costs approx. $250 p.a. with approx. $200 excess per claim, and covers the Landlord against Malicious Damage & Rent Default.
(A totally seperate policy to the building insurance)

-Is there anything like this in USA?

Malicious Damage caused by the tenant requires a police report. It is very hard to establish at tribunal that the damage was done intentionally with malice and not just out of stupidity:

case example;
tenant brought motorbike into living room to change oil and severly damaged/stained carpet - judge ruled tenant had not set out intentionally to cause damage to the carpet -so this was not covered

on the other hand, different tenant caused offensive graffitti to internal walls -this was ruled to have been done intentionally with malice -so covered

However, this policy comes into its own mainly for rent default, of varrying amounts depending on the circumstances but in some cases upto 12weeks if the tenant does a runner.

You can see the peace of mind $250 can give you.

Is there anything like this available in USA?

Timothy W. · Answer

Let's start with damage that a tenant intentionally does. Insurance classifies it as "Vandalism/Malicious Mischief" or VMM for short and yes it can be covered if a tenant does it and you can document it was done with malicious intent (usually with a police report). I once proved that damage done by presumably children was not tenant wear/tear but malicious in nature because the kids wrote "F--- YOU!" on the wall. Now, VMM is subject to vacancy clauses and most US policies won't cover VMM if a property has been vacant for a certain period of time (30 days, 60 days, ect...). This depends on the state and the individual carrier you are getting. Some commercial policies exclude VMM outright so you'll need to pay attention. What is not covered is excessive tenant wear and tear or rent default. I've never seen coverage for it from policies on SFRs to 100+ unit luxury complexes. There is rental reimbursement (typically classified as Business Interruption) IF you are losing rent because of an otherwise covered loss. This only applies to occupied units and typically only applies for the time of actual repairs - not for the time taken to settle the claim or for you to get contractor estimates and wait to get scheduled.

Mark N.A · Answer

I tend to rely on insurance only for 'catastrophic' losses. If my tenants maliciously destroy my property I can press charges. If my tenants don't pay rent for 12 weeks and then take a 'runner' I AM AT FAULT and should NOT be in this business. I doubt this coverage will be around for long.

Account Closed · Answer

Not as far as I know. You can get loss of rent insurance, but that only covers the property becoming unusable in a covered event, such as a fire. You can get a vandalism clause in your insurance. Just be aware that the insurance company will always have some reason that the damage isn't vandalism and won't pay.

Bev Willerby · Answer

Thanks All Appreciate your assistance !

Timothy W. · Answer

No sweat. I should clarify though that VMM is on pretty much ALL property insurance policies. It's a cause of loss. I was just explaining how it works in relation to tenants on landlord policies.

Vikram C. · Answer

Bev, in Arizona it takes about a month. Somes states take less time. Therefore the loss of rent is typically not as great as in Australia and insurance to cover it is also less important. In any event, when you buy a property, you buy it with certain assumptions for vacancy and other expenses and it is important to do it carefully and with conservative numbers so that any surprise is likely to be pleasant.

Mark N.A · Answer

Bev -- it's all local. One must know the local laws.

Bev Willerby · Answer

Hi Vikram sorry, I should have addressed this to both NC Mark and yourself: In Queensland with proper notices, it can take 15days before the agent can apply to the Tribunal and upto a total of 12-14weeks depending on the backlog in the Courts and Evicting schedules. How long does it take to get a tenant out for rent arrears in USA?

Bev Willerby · Answer

Hi Tim Thanks for your input, VMM sounds similar to our landlord insurance. I will make further inquiries.

Bev Willerby · Answer

Hi NC Mark Re â€œIf my tenants maliciously destroy my property I can press chargesâ€ OK -how would this be done? Do you serve them a â€œnoticeâ€ taking them to Tenancies Tribunal or do you go to a Solicitor to sue â€“wouldnâ€™t that be cost prohibitive? Landlord insurance in Australia has been around for 15years that I know of maybe more, in a portfolio of 175 properties that I managed, I would probably have 2-5 claims per year, the other 6 Property Managers in my office averaged about the same. In Queensland with proper notices, it can take 15days before the agent can apply to the Tribunal and upto a total of 12-14weeks depending on the backlog in the Courts and Evicting schedules. How long does it take to get a tenant out for rent arrears in USA?