Am i getting ripped off - landlords insurance :o(

[kiwigirl]

Hi everyone... I haven't been on this forum for over a year or so but now that we have 3 IP's which means lots of expenses i just wanted to get some peoples comments regarding our landlords insurance.... now i did a search and looked up other posts on this topic and found it interesting that alot of people have L.I premiums that are ALOT less than mine... so im thinking maybe we are doing something wrong????? Anyways this is our deal....

IP 1 - 4x2 (Bellmere, Qld) - Insurance is with Real Insurance - premium is $947 per year ($11,255 contents / $283k building)
IP 2 - 4x2 (Pacific Pines, Qld) - Insurance is with Real Isurance - premium is $1023 per year ($11,639 contents / $266k building)
IP 3 - 3x1 (Karratha, WA) - Insurance is through a broker - premium is ridiculous and is approx $3k a year up there...

But my main concern is the Qld properties.... are we getting ripped off??? I did a few online quotes with other companies - Suncorp, NRMA, etc for the same as what i currently have to see the difference in price and it was EVEN MORE! But i see other people are paying the likes of $500 per year for 5 properties and so forth??

Am I over insuring? Is my sum insureds to much? Is there something i don't need? Im really confused? I know its all tax deductions but with Real its a big problem with trying to get our real estate to pay out of rent funds so we end up having to put it on our credit cards (

Your thoughts and comments would be SOOOOOOOOOOOO APPRECIATED!!

(Any recommendations of other companies would be great too!!! and our premiums are coming up for renewal again ( - THANKS!!

 

[wylie]

That is more than we are paying. Our premiums went up for two houses in Coorparoo from a out $1400 to about $1900 with Suncorp so we went with Honan for $1400 (same cover as previous year with Suncorp - about $350K from memory but higher than you are covered for)... so give them a call?

 

[Jen_PFR]

I know you're least concerned about your Karratha premium, but it's worth keeping in mind that anything above the 26th parallel is charged at a much higher rate, due to the cyclone activity. My parents managed a strata development in Exmouth when a huge cyclone went through (I think in 1999? but can't remember) and the following year the only insurance they could get for the development was from Lloyds of London - no Aust insurance company would touch it. The cost was beyond prohibitive.

Obviously over time insurance has moderated somewhat, but this still is a key factor for property insurance in northern WA.

 

[brettc]

I wouldn't think the premiums for the Queensland properties are too far off the mark depending on what cover you are actually getting. I don't know this policy well but am pretty sure it will cover Malicious Damage and theft by the tenant, but not Accidental Damage, which is a drawback. I will maintain that you should always have a policy that includes Accidental Damage. I also think that rent default and legal expenses are options so it depends on whether you have them included as well.

As for the Karratha property, Jen is correct in regard to properties above the 26th parrallel, however what's the sum insured?? Even taking this into account $3,000 seems very high.

 

[kiwigirl]

Thank you everyone for your comments thus far...

Wylie - i have never heard of Honan? Are they are reputable company? I will look into them...

Jen - we used to live up there in our now IP and when i was there the insurance policies for anything were crazy... once i do get our Qld properties insurance sorted i will definitely look back into the Karratha properties one - as generally our renewals go straight to our pm so we don't get to see anything until we get the monthly statement showing $3k + /

Brett - with the current policies with Real we have taken rent default option and legal expenses (up to $5k) - it doesn't include flood cover as it clearly states in bold that we have chosen not to take that option and it doesn't include accidental either...

Do you think i need to lower my values? The amounts we kinda just guesstimated as they are just basic 4x2 homes - average quality...

Apart from Honan can you recommend anyone else i can look at to compare... i just don't want to get ripped off.. (

 

[westminster]

Kiwigirl - as Brett is an insurance broker why don't you see what he can come up for you? May save you chasing around.
The other highly recommended insurance company is Terri Scheer.

 

[james110]

I would try Honan if i were you.

I use them for all of my properties.

 

[HotRod]

The Karratha one is about right.

If you have LL's you also pay for the coverage of the higher rent which adds to the premiums, plus the lovely WA govt takes their 10% stamp duty for doing SFA.

 

[brettc]

The Karratha one is about right.

If you have LL's you also pay for the coverage of the higher rent which adds to the premiums, plus the lovely WA govt takes their 10% stamp duty for doing SFA.

Most policies you will only pay higher if the rent is over $1,000 per week, so not sure what rent you are getting?

 

[kiwigirl]

Thank you again everyone.... I have spent another night up til 1am researching LL insurances and so have emailed Honan so will wait to hear back from them... I have also done a bit more research on EBM and Terri Scheer which alot of people seemed to recommend... I also noticed some of the well known insurers have "minimum" building insured sum which came up as $350k where i did some research at builders (Plantation Homes, Coral Homes etc) and seriously if the properties burnt down you can get a brand new home for like $170-$180k for a nice one - then obviously allow your bits and pieces on top but that doesn't justify $350k???? What to do what to do....

 

[Player]

Thank you again everyone.... I have spent another night up til 1am researching LL insurances and so have emailed Honan so will wait to hear back from them... I have also done a bit more research on EBM and Terri Scheer which alot of people seemed to recommend... I also noticed some of the well known insurers have "minimum" building insured sum which came up as $350k where i did some research at builders (Plantation Homes, Coral Homes etc) and seriously if the properties burnt down you can get a brand new home for like $170-$180k for a nice one - then obviously allow your bits and pieces on top but that doesn't justify $350k???? What to do what to do....

I would be very careful of under-insuring the building component. You need to factor in a turnkey product, including driveways and so on. Also, there is the cost of demolition and removing the old damaged/burnt premises.

If you wing it and think, oh well I'll just get the amount I've insured for (even if it's less than the overall cost to replace what is there), guess what? You won't. The insurer will look at every avenue possible to pay you less and if you are under-insured by a certain percentage they will deduct that from your insured value, so you won't even get the amount you've insured for.

Taking Pac Pines as an example, I find it hard to believe you could build a new 4x2 fully finished (driveways, land scaping etc) and with demolition/removal of the old dwelling for 266 K.

I would never, ever under-insure. By all means look around for the best comparable deal. It's the cost of doing business as a landlord.

I am not an insurance broker, merely offering my 0.02.

 

[beachside]

Honan gives good bang for your buck, but does not cover what I want, very few do. I was actually pointing out the deficiencies in Terri Sheers coverage to one of the mangers at the Property Expo yesterday, he disputed what I said. I have sent him all the relevant sections from his policy wording to him this afternoon so he can see for himself.

Be careful with the cheap policies, even more reason to read the coverage carefully. I was in Bundaberg a few weeks back and was told of one person who was insured with Youi. Had a flood claim and coverage was refused. No doubt flood was not covered by policy but the insulting thing was that they sent him an umbrella as consolation. That is bad enough but an umbrella for a declined flood claim .......could have been someone's sick sense of humour but my bet is that the person did not engage brain before posting ......ooooh ahhhh! I was told that the client was not impressed.

 

[wylie]

I'm still annoyed that our "flood" damage was denied by Suncorp (supposed to cover flood). It is the only time we've had so much run off past our section of hill that our extensive drainage just couldn't cope and it came under our weatherboards and ruined our carpet.

To add insult to injury, it took them seven months to tell us we were not covered. Meanwhile we lived on bare concrete floors through a winter when had they told us earlier, we would have fixed this up immediately.

Suncorp told us they would need to do extensive remedial work (rubbish) whereas we simply replaced the carpet with tiles. If we "ever" get any water through again the tiles will cope, but in 15 years this happened once during a very major Brisbane "event" where many, many places were affected, so we are not concerned. But I'll never insure with Suncorp again, and they probably don't care, but we've removed several policies as they come due.

What also peeves me is that someone we know has been rewarded with new carpets (carpeted whole house after only one room was damaged due to accepting payout for one room of "best" quality carpet, and then using that payout to carpet the whole house) and $3K worth of curtains to replace 50 year old ones that got a bit wet. It was made clear the lack of maintenance allowed the water in but the insurance still paid thousands out on this one claim. How many dodgy claims were paid out like this one we know of.

No wonder insurance premiums continue to rise .

 

[HotRod]

Most policies you will only pay higher if the rent is over $1,000 per week, so not sure what rent you are getting?

Over $1000 pw.

 

[Peter 14.7]

Honan gives good bang for your buck, but does not cover what I want, very few do. I was actually pointing out the deficiencies in Terri Sheers coverage to one of the mangers at the Property Expo yesterday, he disputed what I said. I have sent him all the relevant sections from his policy wording to him this afternoon so he can see for himself.

Be careful with the cheap policies, even more reason to read the coverage carefully. I was in Bundaberg a few weeks back and was told of one person who was insured with Youi. Had a flood claim and coverage was refused. No doubt flood was not covered by policy but the insulting thing was that they sent him an umbrella as consolation. That is bad enough but an umbrella for a declined flood claim .......could have been someone's sick sense of humour but my bet is that the person did not engage brain before posting ......ooooh ahhhh! I was told that the client was not impressed.

Please expand on TS weaknesses, thanks Peter

 

[james110]

I have found Terri sheere a bit steep personaly.


Honan Very cheap and have been told they do pay out

LL +Building insurance 640$

3 Bed house.

Premiums have gone up after July 1st FYI.

 

[beachside]

Please expand on TS weaknesses, thanks Peter

I have mentioned this many times but it falls on deaf ears.

A big gap which most overlook on their policies is cover for loss of rent as a result of damage to the property when there is no lease in place. Most people, including TS on Friday when I spoke to them, automatically say "why would you expect to be paid for loss of rent if you have no tenant to start with".

Some common situations where there is no lease in place but property would be expected to be re-leased within a few days/weeks:

• Normal vacancy of days/weeks between tenants.
• Doing some maintenance, minor renovations between tenants.

Lets say house in burnt down during a bushfire, or storm causes tree to fall across house causing a substantial rebuild, flood, or just partial damage with a lesser period taken to repair. You could have a house which is untenantable for months or a year depending on damage, speed of getting the ball rolling, tradesmen available - especially if widespread damage in community. A policy which would normally cover you for up to a year does not give you cover if no lease in place!!!!!

Some policies will extend cover if an application has already been received or a lease has been signed but has not come into affect. The best I have come up with, and very few, is if the house was tenanted within (1) 30 days, (2) 60 days prior to damage. 30 days is better than nothing, but may not be sufficient every time, 60 days should cover worst case scenario.

Here is TS wording:

Vacant at time of loss
Cover under Insured Events g) Untenantable (building),
h) Untenantable (contents) and i) Prevention of access of this
Policy Section 1, will only apply when:
* The property was tenanted immediately prior to, or at the
time of it becoming untenantable or when access was
prevented, or
* You can demonstrate that the property would have been
tenanted had the loss not occurred.

Last year I phoned TS and asked for definition from the underwriter as sometimes there may be weeks before a new tenant depending what maintenance I might be doing, but would then be leased and I have years of rental history to support this. I was told I would not be covered as not tenanted immediately prior if an incident occurred, and if I did not have an application or new lease signed ready to commence.

Two other areas of concern which are not user friendly, at least when I reviewed last year are:

Policy comes to an end on 3rd business day (on LL Pref policy) if property ceases to be manged by licensed PM. (When I was once renovating/painting etc and got rid of bad PM with problem tenant at end of lease I had no need for new PM until ready to advertise - there was 2 weeks without a PM agreement. This is not an uncommon scenario. There is no difference in risk, but they don't allow the policy to continue, a PIA).

No cover for (1) accidental loss/damage or (2) malicious damage (other than by tenant and visitors) if property occupied by insured. I also asked for definition from underwriter on "occupied" and was told "if I stayed in the house overnight, even just one night". As I stay in the house when doing maintenance between tenants I would not be covered if say someone walked in off the street and did some malicious damage.

I became aware of these holes in cover because of situations which apply to me. They may not all apply to everyone but shows the potential not to covered in such situations. I discussed the no lease in place issue with a number of insurers to make sure they fully understood the situation and bring the issue to light if they were not aware of the hole so they could fix it, but it seemed it was not an oversight. Honan was one who gave no cover at all.

TS are also 40-100% dearer than most other insurers, do provide some extra cover but also have more exclusions.

I suspect TS might review their hard line on the issues mentioned above as a result of what I have sent them as it does not make them the warm and friendly insurer they make out to be.