My Eviction/insurance claim - the details

[Ridin-High]

Evening all,

Thought i'd share my experience with a property of mine.

Now this is my highest yielding property (7.1% gross) based in Sydney south west, the tenant had a history of patchy rental payments during the period of their tenancy which was about 1yr.

The rent dried up around October/November, then the delay tactics by tenant till December when applying to goto tribunal which couldn't get a booking prior to x-mas. Meeting was held shortly after, the tenants claims fell like leafs in the wind.

They tried to claim maintenance requests hadn't been attended to.

Orders were for me to install smoke alarms (which i believe were their when property was given to them, but due to lax ingoing inspection report from PM i had no proof) and for the tenant to pay up and leave by late January.

Date came and the tenant still was in the property, PM went back and got the application stuff sorted for sheriff. Hostile taking back of the property ensued with a gang of sheriffs, PM, Agency owner, Lock smith.... i'm picturing in my head a police style thing where the door is knocked down with a battering ram... im sure it was more mundane.

So tenant default Oct/Nov and was out Mid February. Had cleaners and lawn mowers go in fix up the joint which didn't really have any damage, just dirty.

Entire bond was swallowed from those duties (cleaning, mowing, locksmith, water rates owing)

Took a month to re-lease, insurance claim took awhile to be compiled and forwarded due to lazy PM.

Insurance claim was done through broker with a turn around time from receiving of about 2 weeks. A mountain of paper work was required to accompany the insurance claim form (leases, warning letters, tribunal documents, rental statements)

Total days rental owning paid was 126

Insurance claim process was very smooth, but i did have to wait till all costs are tallied.

Only $100 excess and approx $6,120 paid

Edit (additional info): Some costs may be missed but tally a small amount think sub $300 and are factored into holding costs spread sheet/investment analysis. So 4 months with no rent coming in and other costs coming in as well (rates, maintance blah blah) so it does highlight the importance of having a buffer

Regards,

RH

 

[laurencei]

glad to hear it all worked out for you.

Are you able to let us know which insurer?

 

[Dazz]

Thanks for the post Ridin-High, very informative.

 

[Ridin-High]

H.onan insurance

I also notify the insurer anytime something happens which i think may lead to a claim, eg. if the tenant defaults even if i think it may not lead to a claim. Leaves a paper trail, shows that im not trying anything dodgy bros and keeps them informed.

Regards,

RH

 

[kathryn d]

Good to hear it work out for you.
Wish we had that type of insurance in Canada.

 

[Dazz]

Only $100 excess and approx $6,120 paid

Agreed Kathryn, I'm struggling to see how the Insurance company actually makes money and is able to pay a dividend to it's shareholders.


I imagine there must be oodles of customers who don't claim to cover the liability from R-H's paid out claim.

 

[Mr. Fabulous]

Agreed Kathryn, I'm struggling to see how the Insurance company actually makes money and is able to pay a dividend to it's shareholders.


I imagine there must be oodles of customers who don't claim to cover the liability from R-H's paid out claim.

I was thinking the same thing Dazz. Puts the whole 'nightmare tenant' scenario into perspective, I think. By that I mean, nightmare tenants seem to be a small % of overall tenancies.

 

[sash]

I have two underway.......now so that will help the unclaimed amounts.

One has just been re-let ...the other is being cleaned up.

Hope to get about $2,000 and $3400 back.

I was thinking the same thing Dazz. Puts the whole 'nightmare tenant' scenario into perspective, I think. By that I mean, nightmare tenants seem to be a small % of overall tenancies.

 

[wylie]

Agreed Kathryn, I'm struggling to see how the Insurance company actually makes money and is able to pay a dividend to it's shareholders.


I imagine there must be oodles of customers who don't claim to cover the liability from R-H's paid out claim.

Like all insurance ..... The percentage of people needing to claim is so small that insurance companies make a nice profit.

If that ever changes we will not be able to insure.

I've always thought it is the small (broken window) claims that would eat into the profit rather than the much less common large "whole house gone" claims.

That is no doubt why I can insure a house for $500K for the same premium as I pay to insure my $7K vehicle.

It would be interesting to see the percentage of claims per thousand policies for houses verses vehicles.

 

[Dazz]

Puts the whole 'nightmare tenant' scenario into perspective, I think. By that I mean, nightmare tenants seem to be a small % of overall tenancies.

Agreed - it must be so for the numbers to work for the Insurance company.

 

[Dazz]

I've always thought it is the small (broken window) claims that would eat into the profit rather than the much less common large "whole house gone" claims.

That's perhaps where the genius behind the whole 'excess' component comes into play, by filtering out all of those minor nuisance claims, which would no doubt be an administrative nightmare.

That is no doubt why I can insure a house for $500K for the same premium as I pay to insure my $7K vehicle.

My intuition tells me that the premiums are similar for vastly different amounts because most houses don't move at 100 km/h, passing by other houses doing the same speed, sometimes within mere metres of one another....and they aren't controlled by people straight out of school willing to spin them around doing do-nuts with them within inches of other houses.

 

[BuildingBlocks]

That's perhaps where the genius behind the whole 'excess' component comes into play, by filtering out all of those minor nuisance claims, which would no doubt be an administrative nightmare.

And the other genius, the No Claim Bonus.

Even if my excess is $500 and my repair would cost $700 it is not worth claiming.

 

[wylie]

That's perhaps where the genius behind the whole 'excess' component comes into play, by filtering out all of those minor nuisance claims, which would no doubt be an administrative nightmare.

Absolutely!!

My intuition tells me that the premiums are similar for vastly different amounts because most houses don't move at 100 km/h, passing by other houses doing the same speed, sometimes within mere metres of one another....and they aren't controlled by people straight out of school willing to spin them around doing do-nuts with them within inches of other houses.

This is what I was getting at. The percentage of claims per 1000 vehicles insured would be huge compared to the percentage of claims per 1000 houses insured (I would think).

In the case of both vehicles and houses, the excess would weed out the smaller claims.