Landlords Best Practices
In the event of a claim, insurers will expect their investment property clients to show evidence for their due diligence. We have compiled a shortlist of some best practices.
Most insurers expect their investment property clients to meet some basic standards of due diligence with respect to their investments. By being able to quickly and easily show the insurer that you meet these standards, should a claim situation arise, Paramount Insurance will be able to help you get the results you need, easily and efficiently. 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?
1. Careful selection of tenant(s).
You should be able to show an insurer that you collected and checked valid references.
2. 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.
3. 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 deny a claim.
4. Regular inspections.
Most insurers expect you to personally conduct an inspection of the property no less than every 6 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.
5. 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 absconsion claim could be denied without this evidence.
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This content is maintained by Paramount. Content is copyright its respective owners and is published for non profit educational use only. All original content is copyright Paramount Insurance © 2021. Paramount accept no responsibility or give warranty for the accuracy authenticity or correctness of content.
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