Landlords may incur costs for loss of rental income, repairs and rebuilding, and also suffer a range of other financial and emotional pressures. Landlords rely on their property manager to regularly inspect the premises and report back on any issues they discover. And when losses occur, it’s common for the landlord to seek to hold the property manager liable by claiming they’ve breached their professional duty.
When police were called in to investigate the outbreak of a fire at a rental property, they discovered a drug lab on the premises. The tenant had occupied the property for 18 months and, throughout the tenancy, the property manager had conducted inspections every four months.
Following each inspection, a report was sent to the landlord.
The landlord sought $120,000 in damages from the agent, basing their claim on the presence of the drug lab and the ensuing fire. They had also become aware of an additional occupant residing at the premises.
The agent believed they had followed all policies and procedures, and stated they had recorded the relevant information in the inspection report.
Having the right insurance
This case study shows why professional indemnity insurance is a must. The cost of defending this type of claim can be costly. At JLT, we’ve seen them range from $20,000 to $180,000.
It’s also a timely reminder of why landlords’ insurance is important, because reimbursement of costs can be sought against a landlord’s insurance policy, thereby reducing the chance of the landlord making claim against the agent’s professional indemnity insurance policy.
For further information and to discuss your insurance needs, please contact Realcover and speak with a JLT representative on 1800 990 312 or email firstname.lastname@example.org.
The information contained in this article, which is current as at the date of publication, provides only a general overview of subjects covered. It is not intended to be taken as legal advice or advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies