Tenant Vandalism Insurance
This post is written by Trusted Partner, Park Insurance. To become a contributing editor, please contact our Real Estate Investor Solutions Specialist, David Maxwell at david@reincanada.com.
“IT’S ASTOUNDING THE AMOUNT OF DAMAGE THEY COULD CAUSE IN SUCH A SHORT AMOUNT OF TIME,” SAID SEAN FYFE, A YOUNG FAMILY MAN WITH AN INVESTMENT PROPERTY IN SASKATOON. According to the National Post, he and his wife, Miranda, were left to tackle a huge mess left behind by renters in their Saskatoon home. They estimate that it will cost approximately $14,000 to repair the property.
“Every inch of the house is damaged in some way” reported Sean. The damage included broken appliances, doors torn off frames, stained carpets, and unbelievably, gaping holes in the walls stuffed with garbage and rotting food!
To add insult to injury, all this damage was done to a freshly renovated home – new paint and carpets, updated bathrooms and brand new appliances.
Their insurance will not cover the damage, so the Fyfes had to max out their credit cards, and invest a lot of sweat equity to repair their home. “We really weren’t in a position to afford something like this,” Sean was quoted as saying.
This is far from the only horror story of this nature. Is there anything that real estate investors can do to protect themselves from a similar nightmare? Here are some essential tips:
1. Choose an insurance policy that includes Vandalism or Malicious Acts by Tenants Coverage. Many insurance policies do not include this coverage, but a few do. So, be sure to review your current policy and ensure you have this essential coverage.
As with all insurance policies, it is also important to understand what is and what is not covered under your policy. For example, there is a differentiation made between vandalism and slovenliness. While actual physical damage would usually be covered under a policy which includes Vandalism and Malicious Acts by Tenants coverage, items such as abandoned garbage and over-all uncleanness would generally not be covered.
2. Screen. Screen. Screen. This may seem obvious, but haphazard screening can result in unsavoury tenants who leave unwary investors with a nightmarish clean-up upon leaving. Make sure you have a comprehensive rental application form, and that you personally contact former landlords, employers and other references before renting your property out to anyone.
3. Conduct a move-in inspection with ALL new tenants. This report confirms the condition of the property prior to the tenant’s occupancy and makes any new damage the obvious responsibility of the tenant.
4. Make regular visits to your rental property. Individual provinces will have specific laws regarding how often and under what conditions you can inspect a tenant’s home. Become familiar with these requirements and then make regular legal visits to your investment properties to ensure that all is in good order.
Too much cannot be said about taking the above tips seriously. Vandalism by tenants is a serious issue which continues to plague many investors. Just ask Yolandi Lombard, a frustrated landlord that saw her tenant occupy her property for three months without paying rent and then left thousands of dollars of damage upon leaving.
According to a recent CBC report, Lombard’s home was allegedly left in shambles. Items including the fridge and microwave were missing, garbage was strewn around the house, and holes were punched in the walls.
Lombard said, “I didn’t know people like this existed. I didn’t know that anybody would think it’s OK to treat anybody’s house this way.” Unfortunately, as this and other reports indicate, this type of tenant does exist and it is essential that investment property owners are aware of the dangers and take steps to mitigate these risks.
Chris Westrop is the Vice President of Commercial Lines at Park Insurance. He has 30 years of experience in the commercial insurance business and is a Chartered Insurance Professional with the Insurance Institute of Canada. He is also a REIN member and a regular attendee at many of our programs. Learn more about Chris and the experienced team of Commercial Insurance advisors at Park Insurance. Chris may be reached at (604) 659-3133 or cwestrop@park.ca.
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