Insurance and Bond Claims: Are You Covered?

Why About Time Real Estate insists Landlords are insured.

With more than 30 years of experience, we've successfully managed a wide range of insurance and bond claims, from natural disasters to unexpected surprises. We're here to help you navigate whatever comes your way, including the bond claim process.

When it comes to making a claim, whether it's on insurance or the tenants bond, some property owners are often surprised to discover that their insurance doesn’t cover everything. It's crucial to understand that you can't always access the funds from the tenants bond. This can leave you feeling “ripped off” or lead to misunderstandings with your Property Manager, especially if you weren’t aware of these crucial details.

Insurance and bond claims related to issues like a leaky roof, damaged paint, or worn-out appliances can sometimes be complicated by fair wear and tear. While we're not able to provide insurance advice or predict exactly what the Commissioner or Magistrate might approve, our goal is to highlight the common issues that could potentially cause complications in the bond claim process.

On the building and maintenance side—home and contents—landlords hold responsibility.

**How to Spot Potential and Prevent Claims Issues**

Conducting regular home maintenance is essential to avoid claims issues stemming from the following:

- Cracked roof tiles or gutters: Poor maintenance may cause leaks or dampness.

- Blocked drains, downpipes, and gutters: Lack of maintenance can lead to property damage that may not be covered.

- Plumbing problems: Pipes and flexi-hoses can corrode with age.

- Mould and mildew damage: Condensation from inadequate ventilation can cause this over time.

- Worn fittings: Chipped or cracked walls, benchtops, and rusted hinges or handles.

- Rotten fences or decking: Regular maintenance is crucial to combat rot, rust, and corrosion.

**Top Tips for Staying on Top of Maintenance Tasks**

The good news is you can take steps to keep your home in good condition. During your routine inspections, we handle all reporting ourselves and don't rely on outside parties. This means we can better notice any signs of wear and tear.

Tenants have the right to privacy, peace, and enjoyment during their tenancy, so inspections should be kept as “no longer than necessary.” However, this can sometimes mean that certain issues go unnoticed until after tenants vacate, which is often an unfortunate reality for property owners. Common examples include:

- A wardrobe covering a leaking shower.

- Stored items hiding termite damage.

- Items stored with moisture leading to damp and mould or pest infestations.

- Staining beneath personal items, such as potted plants or car parts.

- Children's toys blocking drains.

- Pets that have chewed and damaged reticulation.

- Undetected damage caused by pets or children.

It's beneficial for landlords to address small issues early on before they escalate into larger, more costly problems. This proactive approach also ensures you meet your responsibilities seamlessly. We collaborate with your tenants to fix tenant-caused issues during their tenancy to limit the amount of bond-related problems.

**Keep Receipts and Manuals**: Document the home appliances you purchase, such as a new washing machine. Remember, optional motor burnout coverage doesn’t apply to motors over ten years old.

**Scheduled Compliance:**

We will arrange the annual electrical, smoke alarm, and RCD compliance certificate renewals. Did you also know that many other features of your home should also be serviced or inspected annually or periodically? Air conditioning, hot water systems, reticulation, garage doors and motors, gutters, trees and shrubs, and pest control. We can coordinate services or repairs with professional tradespeople at your request.

Prevention is always cheaper than emergency repair for an avoidable disaster.

**Budget for Repairs**: Set aside some funds for maintenance tasks, which will help you prepare for inevitable wear and tear expenses. Be aware that when your tenant vacates, you, the owner, must bear the cost of all rectification work before claiming anything back from the bond or insurance.

**Key Takeaways**:

- Standard home insurance does not cover landlord-specific risks like tenant damage, loss of rental income, or tribunal costs. You need a separate landlord insurance policy.

- Specialist insurers (Property Insurance People, Terri Scheer, EBM RentCover) offer deeper coverage and claims teams experienced with landlord scenarios. Generalist insurers (RAC, Allianz, QBE, GIO, AAMI, Budget Direct) may offer lower premiums but usually provide significantly less cover.

- Your building and contents insurance often doesn't cover tenant damage.

- Key areas to verify include loss of rental income, tenant damage (both malicious and accidental), and legal expenses for tribunal proceedings or drug lab clean-up.

- Landlord insurance premiums are fully tax-deductible against your rental income in the year they are paid.

- Always read the Product Disclosure Statement carefully, as coverage, exclusions, and excess amounts vary significantly between providers and states.

**Further Information and Advice**:

- Rental home maintenance - Consumer Protection - LGIRS

- Rental home security - Consumer Protection - LGIRS

- Rental home repairs - Consumer Protection - LGIRS

**Dedicated and Recommended Landlord Insurance Providers**:

- Landlord Insurance | Pip - the Property Insurance People *5% discount applicable for your first year of cover when purchasing online.

- Landlord Insurance Quotes | EBM RentCover

- Landlord Insurance - Terri Scheer

What exactly is wear and tear?

Over time, your property, its fixtures and fittings, appliances, and general building structure will naturally age and wear out. For example, your carpet may become thinner in places from years of foot traffic. Think: I drive to work every day, so my tyres wear down. This is wear and tear – often referred to as gradual deterioration by insurers.

Understanding fair wear and tear vs damage

Fair wear and tear means the gradual deterioration from normal use, while damage is the result of careless or intentional actions that go beyond normal use. The distinction matters because landlords generally cannot claim for normal deterioration but can seek compensation for damage under the Residential Tenancies Act 1987 (WA).

What are the Examples of ‘Fair Wear & Tear’?

Reasonable wear and tear is considered to be changes that occur during the normal use of the premises, including fixtures and fittings. To help you better understand it, here are some real examples:

Loose hinges on windows and door handles
Faded curtains and worn out cords
Scratches or Scuff marks on wooden floors
Faded and chipped paint
Aged kitchen benchtop
Cracks in the wall
Water marks on carpets due to rain or water seepage
Worn sliding tracks

There is no denying that this level of deterioration on a rental property will occur over time. Landlords should expect it when conducting a thorough inspection. However, tenants should ensure that they don't cause any serious damage to the property. This could lead to bond deductions and hefty penalties.

Disputes, bonds and evidence

If a landlord seeks to deduct from your bond for repairs, they must clearly identify the alleged damage and provide evidence. You can challenge deductions by supplying your condition report, dated photos, receipts and communication records to show the pre-existing state or normal aging. If you cannot agree, tenancy disputes in WA are generally resolved through the Magistrates Court of Western Australia or by negotiation with the landlord or agent.

FAQ

What is fair wear and tear?

Fair wear and tear is normal deterioration from everyday use, like faded paint or gradual carpet wear; it is not usually recoverable from a tenant’s bond.

Can a landlord deduct my bond for fair wear and tear?

No, landlords should not deduct bond for normal wear and tear; deductions should relate to damage or cleaning beyond ordinary use and must be supported by evidence.

Landlords vs. Tenants: Who is Responsible for Fixing Damage?

Under the Residential Tenancy Act (1987) in Western Australia, a leased property must be restored to a clean and habitable condition (excluding fair wear and tear) when the Tenants vacate. It should be in the same state as when they moved in. That also means major damage to the premises needs to be fixed to prevent further structural damage. When it comes to restoration, both landlords and tenants share serious responsibilities.

If a property is damaged beyond normal wear and tear. It is often caused by the tenant's negligence, misuse or intentional or accidental acts during a tenancy.

Landlords are also responsible for fixing structural damage and other critical matters related to the property. They are responsible for fixing damaged roofs, decks, leaking taps, and clogged gutters. This keeps their investment property viable for years, ensuring consistent rental income.

Understanding Actual Property Damage Under Tenancy Laws

Landlords and tenants often misunderstand the difference between normal wear and tear and actual damage, leading to tenants losing their bond money or landlords facing unexpected costs.

Torn or missing curtains
Burn marks or pet stains on the carpet
Intentionally scratched or gouged wooden floors
Broken windows and door glass
Damage to the wall paint while removing adhesive posters and decoration pieces
Pet damage, such as scratched glass, chewed items.

Landlords have the right to deduct costs from the bond money if the property is in damaged condition.

Your Building and Contents insurance often doesn't cover Tenant damage.

Just a quick note: a landlord that I managed while working for another Agency as the Property Manager moved out thought their standard home building and contents insurance covered them, did not advise the Insurer the home was now rented, and found out that when the Tenant burned the house down, the Insurer would not pay out.