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What Is Nil Excess?

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lady holding painful neck


In a recent claims matter, a tenant of a residential property alleges that she suffered lacerations to her hand when she was attempting to enter the property. The tenant alleges that the front door (which was open at the time) slammed shut in stormy conditions. As the door was closing, the tenant put out her hand to stop the door and her hand passed through a glass panel on the door. Suddenly the agent found themselves in the midst of a personal Injury claim.

Ordinarily what happens next is your insurer asks you to pay anywhere between $5,000 -$10,000 and that's before a Lawyer has been appointed by the insurer to defend the claim!

However, if you are an agency that exercises best practice in your Property Management division, your Professional Indemnity policy may contain a Nil Excess condition for property management related claims. Nil excess is where the insurer has agreed to waive, or not collect, the property management policy excess (also known as a deductible) in the event of a claim.

In the case of the above scenario, had the agent's Professional Indemnity policy included a Nil Excess condition, rather than having to pay up to $10,000 to the insurer, the agent would instead go through a simple series of checks with the insurer.

Some of these checks may include whether:

  • The agency has used standard property management /strata title agreements
  • The agency has systems and processes to adequately document:
    • The inspection of each property prior to a new tenancy commencing
    • Requests for repairs and maintenance
    • That any requests for repairs/maintenance have been acted upon
    • Suitably qualified contractors have carried out repairs

If the agent is found to adhere to best practice in relation to policies and procedures, then a Nil Excess would have been rewarded.

Aon advise that Bodily Injury (ie. Slip & Fall) Incidents represent over 40% of claims and claims notifications reported to their offices nationally. It’s also important to note that these claims (regardless of merit) cannot be ignored or severe repercussions are incurred.

Aon recognises this poses a risk for the daily duties of an agency and is one of few policies that can offer you this added protection as an automatic inclusion in your Professional Indemnity policy (without any added premium).

To learn more about Nil Excess or find out how Aon can protect you contact us on 1300 734 274 or visit our real estate section.

© 2016 Aon Risk Services Australia Limited | ABN 17 000 434 720 | AFSL 241141. This information is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered. So before deciding whether a particular product is right for you, please consider the relevant Product Disclosure Statement or contact us to speak to an adviser.
 

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