Vandalism or Malicious Acts by Tenants Insurance—A Must-Have

 

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“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 an article that appeared in the National Post in 2015, Sean and his wife, Miranda, were left to tackle a huge mess left behind by renters in their Saskatoon home. They estimated that it would 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 that had new paint and carpets, updated bathrooms, and brand new appliances.

Their insurance wouldn’t cover the damage, so the Fyfes reported maxing out their credit cards and investing much sweat equity to repair their home. “We really weren’t in a position to afford something like this,” said Sean.

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 don’t include this coverage, but a few do. Review your current policy and ensure you have this essential coverage for real estate investors. As with all insurance policies, it is also important to understand what is and what is not covered under your policy. For example, there’s a differentiation made between vandalism and slovenliness. While actual physical damage would usually be covered under a policy that includes Vandalism or Malicious Acts by Tenants coverage, items such as abandoned garbage and overall 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 cleanup upon leaving. Make sure you have a comprehensive rental application form and that you personally contact the former landlords, employers, and other references provided before renting your property out to anyone.
  3. Conduct a move-in inspection with all new tenants and create a report. The report confirms the condition of the property prior to the tenant’s occupancy and makes any new damage the clear 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. 

Enough can’t be said about taking the above tips seriously. Vandalism by tenants is a serious issue, and one that continues to plague many investors. Just ask Yolandi Lombard, a frustrated landlord who experienced having a tenant occupy her property for three months without paying rent and then, after finally moving out, left behind thousands of dollars of damage.
According, to a recent CBC report, the 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 okay to treat anybody’s house this way.”

Unfortunately, as this and similar reports indicate all too clearly, this type of tenant does exist, and therefore it’s essential that investment property owners are aware of the dangers and take steps to mitigate those risks.

Chris Westrop is the Commercial Insurance Manager at Park Insurance. HHeHe has over 25 years of experience in the commercial insurance business and is a Chartered Insurance Professional with the Insurance Institute of Canada and a member of the Professional Liability Underwriting Society. Chris is also a REIN member and a regular attendee of many REIN programs. He can be reached at (604) 659-3133 or cwestrop@park.ca.

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