Forums / Community / Heads Up! / Think you have good insurance? Read This

Viewing 20 posts - 1 through 20 (of 31 total)
  • Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Just a word of warning.
    I had Landlords Insurance (including malicious damage by the tenant) with QBE.
    Building: $640K (full rebuild cost)
    Contents: $70K (hardly necessary as it was let unfurnished)
    Sounds pretty good cover ey?
    So I thought I was covered when the tenant grew canabis in my IP!!

    BUT, QBE hid a clause for all ‘malicious’ acts by the tenant on PAGE 45 (no exaggeration) of their PDS.
    This stated that all malicious damage was limited to a measly $10K building and $10K contents.
    Not much when you consider the damage and the insurance cover that I THOUGHT I had..
    When I took out the policy, I tried reading the PDS but, honestly, my head was spinning past about page 20.

    Anyone any experience in keeping insurers honest in this situation?
    In the meantime: Check your PDS for malicious damage clauses buried way back in the paperwork, especially if you are with QBE.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi 5c1,

    As one who has never had a tenant doing that, can I ask just what actually happened to the house? Like, do they knock down walls to put pipes in, or flood the place leading to rot in the floor? Without your words today, I wouldn’t even have thought of growing cannabis as being “malicious damage”.

    Can you help me understand more by explaining just what damage was done?

    And hey, sorry to hear what happened – thanks for the “Heads Up”

    Regards,
    Benny

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Hi Benny,
    Plastic everywhere including on all walls.
    Water damage to floors. All carpets to be replaced and dried.
    Holes in walls for ducting. Walls need rectification and fully redecorated.
    Electrical wiring tapered with. Electrical surveys and repair.
    Wiring strung from ceilings. Lights disabled. Smoke alarms disconnected.
    Huge amount of debris removal (pots, plastic, pipes, wiring, ducting)
    Police broke down two external doors to gain entry etc etc.

    But the sneaky get-out clause by GIO on page 45 of the PDS could apply to any damage that is deemed intentional by the tenant. Therefore, could apply to a lot of other problems including if the house had been burnt down.
    Note: I used a full lettings management agent who checked the tenants when there applied: Passports, references etc.. all deemed fake by the Police.
    It could happen to you..

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hey mate,

    Thanks for sharing and sorry for your loss and pain. Definitely not cool.

    Yeah, the ‘malicious acts’ clause is a real gotcha. Some policies today state in their summary if they include such acts. Those policies that don’t, usually don’t mention it (except somewhere along in page xx, as you found).

    Definitely something for all of us to pay attention to.

    Thanks again for sharing.
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Yes, I wish more people knew about this insurance racket.
    Maybe a good idea for Propertyinvesting.com members to have a list of insurers that do not have this clause that severely limits payouts for anything deemed a ‘deliberate act’ by the tenant.

    Profile photo of Jason StaggersJason Staggers
    Participant
    @jason_staggers
    Join Date: 2006
    Post Count: 61

    Thanks for the heads up. Another thing to watch out for is insurers’ deliberate attempts to minimise payouts. I was recently working with an investor who was told the damage by his tenant was not “malicious” even though it was clearly beyond normal wear and tear. Finally, after pushing and pushing and talking to three or four different people, he finally got them to admit it was “malicious.” I wonder how many people don’t bother pushing back and leave insurance money on the table. It’s a shameful practice, but I’m sure one that saves insurance companies lots of money.

    Jason Staggers | PropertyInvesting.com
    http://propertyinvesting.com
    Email Me

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Thanks Jason,
    So, I’m on the look out for an insurer for landlords that does not have the sneaky limiting clause for ‘malicious’ damage.
    I consider myself lucky since, if the tenant had caused a fire by their ‘malicious’ action, the building cover would have been a crippling $10,000. Not the $640,000 that I thought I was insured for.
    Anyone know of such an insurance provider?

    Profile photo of hydramaxhydramax
    Participant
    @hydramax
    Join Date: 2009
    Post Count: 47

    Hi 5c1
    Really sorry to hear about your unfortunate situation. Must be very upsetting. But my experience in the past with insurance companies now entails me before applying for any type of insurance asking for a copy of the PDS. I then print it out and take the time using a pen to scrutinise every paragraph on every page. It is a monumental headache and a pain in the butt. However it really is the only way to prevent you from being “done over” by our user friendly insurers.

    Hydramax

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Thanks Hydramax,
    I’m impressed at your diligence.
    Unfortunately, I have had to learn the hard way with QBE.
    Any suggestions for where I should turn for a Landlords insurance policy that is fair when it comes to malicious damage?
    There must be hundreds of subscribers that are in a similar ‘at risk’ state.
    Thanks,

    Profile photo of BallerinaBallerina
    Participant
    @ballerina
    Join Date: 2011
    Post Count: 63

    Hi 5c1

    Would it be possible that your property manager failed at his/her duty?
    Have they inspected the property on regular bases? Or all of the above happened between regular inspections (i.e. within 2-3 months). Every management agreement comes with 3-4 yearly inspections, to be reported back to you afterwards.
    If so, you may look at your property manager’s indemnity insurance.

    Ballerina | Soprano Developments Pty Ltd
    Email Me | Phone Me

    Building Design & Property Development Services

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    You entered a contract and didnt read it? And then blame the other party?

    Did you ask the insurer about malicious damage? Did you seek legal advice before entering the contract?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    The problem was discovered on the first quarterly inspection by the letting agent.

    Re: QBE Insurance. Yes, I failed to read the entire PDS all the way to page 45 to find out about the malicious damage get-out clause. I only have myself to blame for this.
    The reason for my post is to warn others based on my experience since I suspect that there many others out there that do not fully read the PDS cover-to-cover. They might think they are covered for malicious acts when, in fact, they are running a huge risk.

    I’m disappointed with QBE for hiding the malicious damage clause way back in a very wordy PDS document rather than being upfront in the insurance schedule.
    When I took out the cover, I asked about malicious damage, wanted to pay the premium for the cover (thank goodness) and was simply told that I was covered for malicious damage. The QBE rep mentioned nothing of the get-out clause.

    Now, I’m wiser and will be far more careful with the next policy.
    I’m still looking for a suitable insurer for landlords that gives a more reasonable level of malicious damage cover.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi 5c1,

    Just as there are Mortgage Brokers, so there are Insurance Brokers. And, just as a Mortgage Broker learns a lot about the various restrictions/rules of the various lenders, I would expect that an Insurance Broker would likewise have a healthy knowledge of various Insurance Co’s restrictions/rules too.

    Perhaps sound out some of these people by phone – use your new-found knowledge of “malicious damage” as a way to check out each IB’s knowledge as you call them. If they appear to know less than you, then “Next !!!”

    Also, when you find some that appear to have intimate knowledge of such things as malicious damage and Insurance Co “fine print”, ask them which Company they would use and why. Then check whether they stand by their selections/recommendations, and if so, to what extent? Do they have insurance to protect you if they recommended you to a Company that proved to also have “weasel clauses” that hurt you?

    Failing all that (and maybe even as an adjunct) do make contact with an Insurance Ombudsman (I presume there will be such a thing) just to see if you can make lemonade from the lemons that QBE served you.

    Good luck,

    Benny

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Thanks Benny,
    I will pursue the insurance broker option.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi 5c1,

    I had a quick look around – do a Search on Google for “Insurance Ombudsman” and you will likely be directed to “Financial Ombudsman Services”, perhaps in your State. But do start there.

    The role of an Ombudsman is to work with you to help resolve issues where “David is struggling against Goliath”. I would think your situation deserves to have a “Big Brother” called in to help you to resolve your losses in light of that “weasel clause” used by the Insurance Company against you.

    Benny

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Thanks Benny, That is a great help.

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hi 5C1,

    Discussing your case with the Ombudsman could yield interesting results and info. Would love to know how that went.

    Moving forward, am also interested to see which insurers other members work with. Kept my silence until now as was waiting for others to suggest but none yet so here we go: we work with Allianz. They cover malicious damage. You can contact them directly or PM me for a special discount code. This is one of our over-the-top services (i.e. you must first have a loan through us) but am happy to extend this to you as a special courtesy :-)

    Hope this helps?

    Cheers,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of hydramaxhydramax
    Participant
    @hydramax
    Join Date: 2009
    Post Count: 47

    I have mine with Allianz as well.

    Hydramax

    Profile photo of 5c1eb9d25c1eb9d2
    Participant
    @5c1eb9d2
    Join Date: 2013
    Post Count: 13

    Thank you Ethan, I will finalise the claim process with QBE and then we can talk about a new policy.
    I hope my experience has been a good warning to others to read all the fine print and make sure that that they are adequately covered, irrespective of what it might say on the cover note..

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi all,
    As I don’t know/use QBE, others will need to answer this…

    What I wondered is if perhaps cheaper offerings are cheaper for a reason? e.g. a Bank can offer a Basic Loan, or a Standard Loan. The Basic one is cheaper, but it offers far less options – it really is Basic, but enough for many people in most situations.

    And then, playing Devil’s Advocate, $20k of cover for “malicious damage” would probably cover 90% of all malicious damage claims – only the extreme 10% (as with 5c1) that would be left wanting. Anyway it will be good to read more once things are resolved, 5c1.

    This is such an important subject, and one that we all can do with knowing extra about. Thanks for starting it – let’s see where it ends…. (hopefully with some good news for you, and thus for others reading later).

    Benny

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