Residential tenancy bonds are inadequate at protecting landlords, according to new statistics, which show that in 59% of insurance claims paid to landlords for loss of rent – as a result of property damage and absconding tenants – the landlord has no available bond left over to contribute to any damage or rental loss.
General manager – insurance services of Terri Scheer Insurance Brokers, Carolyn Majda, said the results are bad news for property investors, who face being left substantially out of pocket, even after the bond has been paid.
“While many landlords rely solely on the bond to cover costs if a tenant damages their property, when taken on its own this is clearly an inadequate risk management tool,” Majda said.
“Residential tenancy bonds are important in helping landlords to recover costs; however, investors need to consider a range of other risk management tools to ensure they aren’t left out of pocket.”
Even those landlords who have the utmost confidence in their tenants could be faced with reparation costs or loss of rental income, she added.
“Even the most fastidious tenant can cause damage to a property or suffer undue hardship due to loss of job or other circumstances that leave them unable to pay their rent. As a result, it’s vital for landlords to ensure they have adequate insurance in place to cover them against these risks,” Majda said.
“It’s impossible to predict what might happen to a property or tenant, and having adequate insurance provides peace of mind that if the unforseen should occur, you won’t be left to foot the bill.”