Landlords Best Practices

In the event of a claim, insurers will expect their investment property clients to show evidence of their due diligence. We have compiled a shortlist of some best practices.

Most insurers expect their landlords to meet some basic standards of due diligence. Even if a property manager is employed to manage the situation, should the need arise, they will have to provide the information an insurer requests.

What does an insurer expect of their clients?

You should be able to show an insurer that you collected and checked valid references.

Tenancy Agreement

Have a tenancy agreement in place and registered with Tenancy Services.

Careful selection of tenant(s)

You should be able to show an insurer that you collected and checked valid references.

Collecting a fair bond

You should be able to show that you collected a bond in advance of the tenant taking residency. Receipts, bank statements etc are all acceptable evidence in these cases. Some policies are specific about the bond you collect, so check with Paramount when we place your cover, or consult the policy wording.

Collecting rent in advance

It is generally expected that rentals are paid for in advance. Some insurers specify a minimum of two weeks rent in advance. If you cannot show that you are collecting rent in advance, the insurer may be within their rights to reduce a claim settlement.

Regular inspections

Most insurers expect you to personally conduct an inspection of the property no less than every 3 months, or sooner if the tenants change. If you employ a property manager, they should keep records of their inspections on your behalf. If you manage the property yourself, you can show you conducted these inspections with email transcripts (if you scheduled the inspection by email). In some cases the insurer will speak to your tenant to confirm when you last inspected the property. This is particularly important when it comes to any potential gradual or malicious damage claims.

Informing and pursuing tenants when they are in arrears

You are expected to notify your tenant once they become 10 or more days in arrears on their rent. If the first notification is sent via email or letter and the tenant has still not brought their accounts up to date, you must send a second notification and ensure it is received by the tenant. You should keep copies of all this correspondence as well as receipts for any recorded-delivery postal services you employ. Leaving phone messages is unadvisable and a loss of rents or a claim where a client leaves without paying could be denied without documented evidence.