Insurance Claims for Tenant Vandalism in Florida Rental Properties
Tenants don't always treat your rental property as if it was their own home. When does their damage rise to a level that justifies making a homeowners' insurance claim?
The relationship between a landlord and tenant can range anywhere from very good, to a passive business relationship, to outright contentious. If a tenant doesn't respect the landlord's property, or a contentious relationship manifests itself physically and revenge turns into property damage, you might have grounds to make an insurance claim for that damage, and possibly even loss of use if the property is uninhabitable because of the damage and you’ve lost rental income.
An experienced local public adjuster can review your insurance policy and compare it to the specific situation you might find yourself in. VIP Adjusting's public adjusters are based in Port St Lucie, and handle property insurance claims throughout Florida's Treasure Coast, including claims for damage to rental properties.
What do Landlord Insurance Policies Cover for Rental Properties?
Homeowners insurance for rental properties in Florida are relatively similar to homeowners insurance policies for owner occupied dwellings. They require disclosure of occupancy as a rental property, though you'll find the major difference in coverage for contents.
The dwelling/building coverages are almost identical. A standard homeowners insurance policy for an owner occupied dwelling is an HO-3 or "all risk" policy, which means the policy covers all direct physical loss, and then limits coverage from there. The corresponding policy for landlords insuring rental properties is a DP-3 policy, or "Dwelling Policy" form 3. It shares the language for the dwelling with an HO-3 and is also an all-risk policy.
A DP-3 policy for landlords may have limited, or no coverage for personal property or contents. This is important to discuss with your insurance agent in advance so that you aren't renting a furnished property without the proper coverage. Many landlord policies do cover landlord's furnishings. Again, this an issue you should check with your insurance agent or insurance broker on before you find yourself with property damage and having to make a claim.
There is also a less popular, and lesser quality policy for landlords, a DP-1 policy. It's cheaper and that gets some people to fall for the trap, because it really is an inferior policy that only covers a list of what are referred to as "named perils."
For purposes of the information in this post, we'll assume a landlord has the more common DP-3 all risk policy.
Wear and tear, and age related factors are not covered under landlord policies
Insurance policies have specific exclusions for wear and tear and other age related factors, because homeowners insurance is meant to cover direct physical loss and accidental damage to property. Insurance is not meant to upgrade or remodel your home, or to take care of overdue maintenance. If the carpets are getting old, that's not something your insurance policy is meant to pay to replace.
Likewise, what's sometimes referred to as "hard living" is not covered by property insurance. Anything that would normally be considered something that would be covered by the security deposit (although the security deposit would also apply to items beyond this type of damage, including your deductible if you need to make a claim) is typically not covered by your insurance policy. Worn and stained cabinets wouldn't be covered by your insurance, or scuffs on tiles, excessive cleaning, worn paint or dirty walls. These types of things might be the tenant's responsibility, but likely not your insurance company.
What would a landlord's insurance policy cover then?
We've handled a number of claims for damages caused by tenants to a landlord's rental property. The two most common scenarios for these are damages caused by parties or party related activities, and angry tenants who have had a dispute with the landlord or been evicted, and before leaving the property have attempted some kind of revenge.
Some of the damages we've seen related to the type from parties or partying would be sizable holes in walls, cigarette burns to carpets (and sometimes fire or smoke damage if that isn't noticed right away), broken tiles from dropped objects, and, believe it or not, we've seen damaged roofs, decks, and patios from shenanigans related to pool parties.
Sometimes the landlord tenant relationship can become incredibly vindictive and the tenant, in possession of the property may seek their metaphorical pound of flesh. Claims VIP Adjusting's public adjusters have handled from tenant damage have included smashed and broken tiles, stolen appliances, ripped screens and broken windows, holes in drywall and plaster, broken pipes (and related leaks), and damaged AC units are the most common. We've also seen a number of bullet holes.
We have also handled a large commercial tenant vandalism claim over space related to a supermarket where the former tenant, after obtaining a new location and in order to protect their own business from a competitor went through the building destroying fixtures and utility hook ups, flushed concrete down the building's toilets, stole the air conditioning units on the roof, and poked holes in the roofing membrane.
Loss of Use and Additional Living Expenses
If a building has sustained significant enough damage that it's no longer habitable, your policy may cover lost income from the inability to rent (or in a commercial policy, business interruption coverage), but only if certain conditions are met and only for certain time periods. This is one of the reasons assistance from an experienced public adjuster can be the difference in your claim. Lost rental income can exceed the damages to the property and can quickly become the driving point of a claim, putting your investment in the property itself at risk.
If you've found yourself in a situation where your former tenant has caused damage to your rental property, call or contact VIP Adjusting today for a free claim review.
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More info about the background of VIP Adjusting’s public adjusters
The Most Common Landlord Insurance Claims
A good landlord insurance policy is essential to the smooth running of a rental property. Although property owners tend to view the premiums as a necessary evil, it makes good business sense to have adequate landlord insurance.
It can save landlords from paying the penalties for many damaging events that can occur in a rental. However, when buying insurance, landlords should also endeavor to get the most coverage at the lowest premium.
They can do this by finding out what insurance claims property owners are most likely to make. And having known what these claims are, they should strive to avoid the risk of making similar claims.
What are the most common insurance claims that landlords make?
1. Loss of rental income
As with every business, owning rental property comes with a measure of risk. One of those risks is that tenants in a property may stop paying rents. This can happen if some adverse event makes the home uninhabitable and the tenants move out, as a result, or simply refuse to pay the rent. Examples of events that can create such a situation include storm, flood, fire or smoke. When a property becomes uninhabitable, the landlord's rental income stops, but their bills do not. This is why loss of rental income is the number one insurance claim that property owners make.
How to avoid it:
Most loss of rent claims come from events beyond a landlord's control. Property owners cannot do anything to prevent rainstorms or floods. What they can do, however, is limit the risk of man-made events which also lead to loss of rent, such as fire or smoke damage.
2. Water Damage
This results from damage due to the unintentional discharge of water. The common cause of the problem is faulty plumbing, poor plumbing maintenance, and tenants' negligent behavior. This problem is fairly common and very costly to fix. Water damage, if left undetected, can result in massive damage to a property.
How to avoid it:
The best way to solve water issues is to prevent them. The landlord should implement a regular schedule for thorough inspection of the home's plumbing. Tenants should be properly oriented on how to manage the plumbing. And the lease agreement should include clauses on the consequences of tenant-originated water damage.
3. Accidental damage
This claim results when items in the home, or some parts of the structure, are unintentionally damaged by occupants. This could be a case of damage to wooden floors, torn furniture, ripped-up carpets, or a broken television set. Accidental damage poses a risk to a rental property because it makes it less attractive to potential tenants and reduces the home's resale value.
How to avoid it:
Landlords cannot completely eliminate the chance of this happening but they can reduce it significantly. One way they can do this is by using décor that is durable and less likely to get damaged.
When installing fittings and fixtures, owners should prioritize hardiness over other qualities. A thorough vetting of tenants will also help to eliminate renters who are prone to engage in activities that increase the chance of accidental damage, such as parties.
4. Malicious damage
This is damage that is intentional. It includes things like large holes in the walls, kicked-in doors, cigarette holes in furniture or some other form of blatant acts. Most of the time, malicious damage is done by outsiders, such as, visitors to a tenant's apartment. It could also result from vandalism or burglary.
How to avoid it:
The best protection against malicious damage from criminal activity is to implement appropriate security measures. Installing window grills, burglar alarms, motion detectors, and bright lights around the perimeter can deter criminals.
Having sturdy locks on gates, doors and windows, as well as CCTV cameras on the premises will reduce incidences of malicious damage. And landlords should make it the tenant's responsibility to pay for damage caused by their visitors.
5. Weather damage
Storms and floods happen all the time. When they do, they often leave their mark on a property in the form of damage. In some areas, winter storms are the major problem, in others areas, the damage is caused by strong winds.
Floods can also be the cause of damage to a property. There is not much a property owner can do about these acts of nature, except to prepare for them and possibly reduce their negative impact on the property.
How to avoid it:
The part of a building most commonly damaged by storm is the roof. To protect against the probability of roof damage, gutters and downspouts should be maintained properly. Loose and missing shingles amplify the power of wind and water to damage a roof.
They should be repaired or replaced promptly. Raising air bricks around the property and keeping electrical sockets ground will help reduce flood damage. And when there is news of an impending storm, homeowners should take extra steps to protect the home.