Source : The Business Times, April 17, 2009
AS disputes between landlords and tenants hot up, two insurance companies have launched a rent protection insurance scheme to shield residential landlords from rental income losses.
Said to be the first in Singapore and Asia, the product from Jardine Lloyd Thompson (JLT) and QBE Insurance makes up for up to 12 months of lost rent (capped at $100,000) in several events, such as the tenants defaulting on payments or real estate agents absconding with rents collected.
The insurance also covers other administrative costs such as legal fees incurred in evicting tenants.
At 15 per cent of one month's rent, premium for the rent protection insurance is affordable, said JLT business development director Gerard Lee.
'Landlords and real estate agents . . . have commented that it is being introduced at the right time in Singapore.'
The insurers noted a rising number of landlord-tenant dispute claims.
According to data they sourced from the Small Claims Tribunals of the Subordinate Courts of Singapore, there were 1,137 such cases in 2008 - 70 per cent more than a year earlier.
And feedback from the real estate industry indicates that most disputes do not even reach the tribunals, the insurers highlighted.
As Dennis Wee Group director Chris Koh said, it is hard to take some tenants to task if they have simply disappeared.
With market conditions deteriorating, the insurers also felt that rent protection insurance would come in handy.
Institute of Estate Agents president Jeff Foo observed that rent defaults have increased significantly from nine months ago, and such cases would hurt landlords that rely on rental income for mortgage payments.
The new product will be distributed through real estate agents, who will get a referral fee. Coverage applies for entire tenancy periods of up to 24 months, and landlords have to bear deductibles in some cases.
Rent protection insurance has spawned premiums of over A$30 million (S$32.5 million) in Australia, JLT said.
'We believe that this product will find comparable success in Singapore and in Asia.'
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