Landlord Protection Insurance - A MUST

By Jade Guilmartin

You will often hear of horror stories of tenants moving in to rental properties and doing damage, not paying the rent and sometimes even refusing to move out.  Often this results in a very distraught landlord who may not have the money or the means to fix the problem.

Luckily, situations like this occur on the rare occasion, and the majority of tenants are good law abiding citizens who pay their rent on time and look after their homes as though it were their own.

At our office, we consider the initial screening of the tenant to be one of the most important jobs we have.  After all, if we select a great tenant, our workload is a lot less and therefore our profit margins are much higher – as well as the fact that our clients are happier.

However, despite all the systems and procedures we have in place to ensure the above does not occur, we recently have had one of these unfortunate instances with a tenant of ours, and the damages and loss of rent bill has totaled just over $11,000.
It broke my heart to see these tenants do such an awful thing to our client.  However, there are a number of important lessons that other landlords can learn from their experience.
The first thing to point out is that even good tenants who have great references, no bad recorded history, and a good income or occupation can still turn bad.  People’s lives change, they get divorced, they lose their jobs, they develop abusive relationships, or they can fall in to other traps and bad situations. When these changes occur their financial situations can change, as can their attitudes and personalities.   Just because they have a good history and are good when they occupy the premises does not mean they will be good forever.
The second thing you can learn from the experience is to protect yourself against these potential losses.  My clients did not have any insurance to cover their problem.  This means that they have to find $11,000 to fix the problem themselves.  While we are going through court proceedings to claim this money back from the tenant, there is no guarantee that the judge will rule in complete favour of the landlord, and no guarantee the tenants will have the money to repay the landlords.  Meanwhile, because of the state of it, the house sits vacant with a mortgage on it and does not earn an income.
As a landlord myself, I always make sure I am adequately insured.  The insurance you need is called Landlord Protection Insurance, and most large insurance companies offer this service and can package it together with your regular insurance policy.  There are also some smaller companies who specialize in the service. 
I have written this post today to demonstrate that bad situations can occur – even if you have a fantastic real estate agent, or if you have done the reference checking yourself and think that you have chosen well.  While these bad situations only happen on the very rare occasion, if you cannot afford for it to happen at all, I strongly recommend you be insured. 
If you would like to know more about Landlord Protection Insurance, or our tenant screening process, please contact me and I’d be happy to answer all your questions.
Our office offers a comprehensive Consumer Protection Guarantee which can assist in reducing the risks involved in renting out your property and we’d be happy to send you a copy of this should you be interested.