What to do if a tenant damages your property

If you’re a landlord, dealing with damage to your rental property can feel overwhelming. Here’s what to do if a tenant damages your property, and how GIO Landlord Insurance can help you recover quickly and confidently.

Does landlord insurance cover tenant damage?

GIO Landlord Insurance can cover loss or damage caused by tenants or their guests when it falls into specific insured events:

• Theft or burglary by tenants or their guests is covered when there is a valid rental agreement and you hold the relevant property or contents cover. A $500 excess applies in addition to other excesses.
• Malicious acts and vandalism by tenants or their guests are covered, again with a $500 excess in addition to other excesses and subject to exclusions (for example, cleaning costs due to neglect or unhygienic habits are not covered).
• Accidental damage at the property is available as an optional cover. You can add it to your policy for an additional premium. This protects against sudden, unintended damage at the insured address that is not otherwise an insured event.

What if my property is for short-term rentals?

Short-term holiday letting arrangements such as offering the property on platforms like Airbnb, are not treated as a rental agreement for this policy. In those cases, there is no cover for theft or burglary by tenants, loss of rent or income or legal costs to recover unpaid rent, or lock replacement.

Damage to rental property by tenant: what’s covered vs. excluded

Insured events cover specific incidents. However, wear, tear, and deterioration, or damage due to neglect or poor housekeeping are not covered. Neither are the costs to clean odours, or remove abandoned items after untidy tenancies.

For “Escape of liquid”, GIO covers sudden, unexpected loss or damage from items like:

• pipes
• fixed tanks
• fixed heating and cooling systems
• refrigerators
• freezers
• dishwashers, or
• washing machines.

This can include cover of reasonable exploratory costs to find the source and restore areas opened up. Limitations apply, for example, shower bases and the item that leaked, such as the shower head, itself are not covered.

Accidental damage by tenant

Accidents happen. A dropped pan can crack a tile or knock a benchtop. With the GIO Accidental damage at the property optional cover, accidental loss or damage to the property or contents at the insured address can be covered, subject to exclusions listed in the PDS.

Are tenants liable for accidental damage?

Liability depends on your rental agreement and the circumstances of the incident under residential tenancies laws. In practice, you can claim under your policy where cover applies. GIO may then seek to recover your loss from the responsible party.

Can a landlord sue a tenant for damages?

You can pursue tenants outside insurance via the relevant tribunal or courts when a breach occurs. Your GIO policy does not cover general legal costs to sue for property damage, but it may cover legal costs to recover unpaid rent when you have an approved tenant-default claim and you have obtained GIO’s permission beforehand.

Can tenants be charged with criminal damage?

Where damage is deliberate and malicious, report it to the police and keep the report number. This is part of the claim process for malicious acts and vandalism.

Can you evict a tenant for damaging property?

Eviction processes are governed by your state’s residential tenancies legislation and require proper notices and orders. If a tenant is legally evicted and fails to return keys, GIO can cover lock replacement up to the stated limit, provided a rental agreement is in place.

How GIO Landlord Insurance can help after tenant damage

Loss of rent

There are two pathways:

1. Following an insured event: If the property can’t be lived in, GIO may pay the weekly rent for the time it takes to repair or rebuild, up to 52 weeks and capped at 10% of the relevant sum insured.
2. Tenant default: If a tenant stops paying rent or leaves without notice, GIO may pay the weekly rent for up to 14 weeks on fixed-term agreements (4 weeks on periodic), with a $10,000 cap per incident and a $500 excess for specified items. You must take all steps allowed under your states’ ‘Residential Tenancies Act’ to remedy non-payment and evict if required. A minimum threshold of four times the weekly rent applies to this cover.

Legal liability

Your policy includes up to $20 million for legal liability arising from incidents connected to your ownership of the property or insured contents.

Emergency and exploratory repairs

Where insured damage occurs, GIO can cover the reasonable and necessary costs of “make safe” works and other repair or rebuilding costs, such as professional fees and compliant upgrades where required for damaged components, subject to limits.

What to document and how to prepare

• Keep entry, exit and routine inspection reports with photos. This is a stated responsibility under your policy and supports claims for tenant damage.
• Maintain locks, smoke alarms and security devices.
• Ensure your sum insured is appropriate and review it regularly to avoid underinsurance.

Explore GIO Landlord Insurance

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Read the Product Disclosure Statement before buying any insurance. The Target Market Determination is also available.

The information is intended to be of general nature only. Subject to any rights you may have under any law (including the Australian Consumer Law), we do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.