Protecting your rental property from crime
As a landlord, you work hard to provide safe and comfortable homes for your tenants. But were you aware that a significant portion of rental-related claims stem from criminal activity?
In 2023, 14% of the claims we processed at initio were related to criminal actions, such as malicious damage, methamphetamine contamination, and burglary. These incidents not only cause stress and financial strain but also unexpected expenses for landlords.
Burglary and theft
As a part of the criminal activity, 30% were related to burglary and theft. This can be a common issue, especially when a rental property is occasionally vacant, making it an easier target due to the absence of people within the home.
Your property being empty for over 60 consecutive days will change your policy terms, and a higher excess of $5,000 will apply if you need to make a claim. You can reduce this excess to $1,000 with an audible alarm system that’s professionally installed. This helps especially if there’s damage because someone tried to break into your home. If you’re expecting your property to be vacant for reasonably long periods – beyond 60 days, get in touch with us.
Just over 41% of burglary-related claims we received last year were related to theft of copper piping, plumbing, or hot water cylinders!
Not only does this result in stress for landlords to replace these items, it also results in a hefty bill to cover, as well as a potential loss of rent. The average cost for the accepted claim, relating to repairs for our clients last year was just over $8,000.
Our policy offers an automatic benefit for malicious damage, or theft by tenants. 41% of rental-related claims were paid out through our automatic benefit. You can enhance property security with locks and lighting to deter burglars. Consider installing surveillance cameras or alarm systems and maintaining your property adequately. This will help it look lived in as well as deterring unwanted activity.
Malicious damage
Of all the rental-related claims we received throughout 2023, 24% were related to malicious damage. Such damage can occur throughout a tenancy, but we saw 31% of these claims stemming from eviction. In this stressful scenario, landlords face the dual challenge of evicting a tenant as well as addressing significant property damage. These types of claims result in an average claim cost of just over $9,000 – an expensive, and unexpected type of bill!
Fortunately, our landlord cover offers an automatic benefit of $25,000 per event, for claims resulting from malicious damage caused by tenants. Make sure you conduct thorough tenant screenings through reference checks, credit checks and tenancy tribunal history. Also, establish clear lease agreements to minimise risks of eviction-related damage.
In the event that a key is lost or stolen, you can take action and replace it, and Initio’s policy has a benefit designed exactly for this! This will help minimise the risk of someone returning while it might be vacant. With our landlord policy, we offer an excess-free keys and locks benefit – where we cover up to $1,000 for the replacement of keys and locks.
Methamphetamine contamination
While not common, this is a costly issue. Across all the criminal activity-related claims that occurred in rental properties in 2023, just over 11% of these claims were related to methamphetamine contamination. While this represents a small percentage, it is the most costly and widespread type of incident to affect your rental property, with an average cost of just over $20,000. Since your property cannot be tenanted when this sort of situation occurs, you as a landlord, will also suffer from loss of rent, another cost that heavily affects you.
Initio’s landlord cover includes an automatic benefit of $30,000 for methamphetamine contamination which will cover the testing, and cleaning costs in the event of a contamination taking place. We also offer an automatic benefit of $20,000 for loss of rent, which can be increased. We are prepared to cover you for this criminal activity as we understand the costs – and time it can take until your property is thoroughly cleaned.
Regular property inspections can help detect early signs of drug-related activity. Also performing reference checks, as well as tenancy tribunal history will help determine in the early stages if they will be good tenants.
Arson
While we only saw one claim relating to arson last year, it can also be the most expensive rental crime-related claim we pay for. This is because a house fire causes extensive damage, which can affect the overall structure of your property. To mitigate this risk, install smoke detectors and fire extinguishers. You could also provide a fire blanket, an invaluable tool for smothering fires. It’s a good idea to have fire safety equipment easily accessible, offering tenants a quick solution to douse flames before they spread.
Check your sum insured
In tough times, lowering your sum-insured to reduce your premium might seem appealing. However, this could lead to ‘under-insurance,’ a risky strategy that could backfire if significant damage occurs. Insurance is there to put you back in the position you were in before any mishaps, and cutting corners on your sum-insured might leave you short when you need support the most. We have seen the occasional customer not having their property fully insured for the right amount. This creates large amounts of stress, so we always recommend reviewing your sum-insured yearly, at the renewal of your insurance policy.
Initio, your partner in landlord insurance
Initio is dedicated to helping New Zealand landlords safeguard their rental properties against unforeseen events. By understanding the potential criminal activities, or accidents, that can impact your investment, you can take proactive steps to protect it. With our comprehensive landlord cover, you can enjoy peace of mind knowing that your property, and your financial well-being, are protected.
Let initio be your partner in navigating the challenges of rental property management. Our goal is to provide the protection and support you need to ensure your rental homes remain safe, secure, and profitable.
FOR MORE INFORMATION
ARTICLES OF INTEREST:
- Calculate your sum insured
- What are my obligations as a landlord?
- Is my house insured for fire?
- Minimising fire risks in rentals year-round
- Can I hold my tenant responsible for damage?
- Is my rental property covered for meth?
The statistics presented in this article are based on a comprehensive analysis of claims data from initio for the calendar year of 2023, spanning our entire rental claims portfolio. Please note that all figures are approximate and have been calculated to provide a representative view of the claim trends during this period.