The Difference between Wear and Tear vs Accidental Damage

So your tenants have moved out and you’ve done the final inspection on the property. You’ve compared the state of the property to the official condition report, and guess what – your property doesn’t look as good as it did when the tenants moved in.

You start to freak out and withhold the bond, while your tenant claims any damage is wear and tear … tensions rise, and the next thing you know the tenant has hit social media slamming you and your property manager and they have filed a report with the Civil and Administrative Tribunal.

Needless to say this isn’t something you’d be wanting.

The problem here often stems from the loose definition around what exactly is classified as ‘wear and tear’ and what is defined as ‘accidental damage’.

To get clarity on this issue we spoke to Yolanda Webster from CoverWise Insurance, as, being experts in the area of landlord insurance, they have dealt with this many times. She explained that in Australia, unless the contract states otherwise, tenants are not responsible for paying for fair wear and tear to a property. It’s only when the tenant has been irresponsible and accidentally or intentionally caused damage to a premises that he or she is liable to pay for repairs. She explained that because the insurance is not a maintenance contract insurers take the same view.

What is Wear and Tear?

According to NSW Fair Trading, wear and tear means the normal deterioration of a property from ordinary, everyday use. Exposure to the elements, time, as well as day to day living can cause fair wear and tear. Although real estate tenancy laws vary across each state and territory, the industry broadly accepts this definition.

Fair wear and tear

Below are some common occurrences of wear and tear that landlords are responsible for and not covered by insurance:

What is Accidental Damage?

The definition of accidental damage is mostly standard across home insurance policies, and refers to damage that occurs suddenly as a result of an unexpected and non-deliberate external action. This will typically refer to an unintentional one-off incident that harms either the property or its contents.

In terms of home insurance, a reasonable interpretation of the word damage includes not only physical damage to an item, but also something that resulted in a loss of function. For something to be considered accidental, it must be sudden and as a result of an external, visible and violent cause.

It is important to know that many home insurance policies will not cover damage caused by chewing, tearing or scratching by animals.

What is Considered Damage Covered by Most Insurance Policies?

Yolanda states that with regards to CoverWise policies, tenants are only responsible for negligent, irresponsible or intentional actions that cause damage to the premises, however, this may vary with your policy or insurer. Insurance policies also take into consideration accidental damage.


Deliberate Act – means an act carried out without permission but without malice, vindictiveness or spite, and with the full knowledge that the action will alter the current state of the property.

Malicious Damage or vandalism – means a wrongful act motivated by malice, vindictiveness or spite with the intention of damaging the property.

Proving Fair Wear and Tear

Thorough rental condition reports – complete with detailed photos and potentially even videos – are very useful for avoiding or settling disputes over fair wear and tear. It’s in the best interests of both tenants and landlords to ensure that these reports are complete and signed. With a bit of care, consideration and proper documentation, the outcome of a loss is predictable.

How to Avoid Disputes

One of the best ways to avoid disputes is to ensure your property manager or yourself carries out periodic inspections of your investment property to ensure it is being well cared for and any routine repairs are being made. Each state or territory has different allowances around the number of inspections per year.

Another way to avoid disputes is by carefully reading the insurance policy’s product disclosure statement. Some policies will not provide cover if the tenancy has moved to a periodic lease. Whereas other policies may reduce claims by depreciation of fixtures and fittings.

Knowing what is in the fine print of the insurance policy and passing on to tenants what will and won’t be covered eliminates the possibility of later disputes. If the landlord is upfront about insurance coverage, then the tenants can’t argue that they weren’t properly informed.

When Accidents Happen, We Can Help

Knowing the difference between wear and tear and accidental damage can eliminate a lot of grief in situations where a lease is about to expire or damage needs to be urgently fixed. Once both tenants and landlords work out what constitutes damage or simple wear and tear, the next step is to work out what their specific home insurance policy will cover and what it will not.

In most situations disputes over damage to a rental property can be avoided by being transparent about insurance policy coverage and making sure that both parties are keeping up with regular property maintenance. However, the biggest tip for both tenants and landlords is to understand that occasionally accidents do happen.

What to expect in the new financial year

The 2019 financial year (FY19) was an eventful 12-month period for property markets around the country. Royal commissions, elections, interest rates and global economic events all had an influence on real estate owners and buyers over the course of the year. Positively, now these events have concluded, looking forward to FY20 there are signs of a rebound in confidence for property buyers, and markets are expected to benefit from this.

What to expect in FY20

Recent indicators point to a more optimistic outlook for real estate markets over the coming 12-months. It appears that the cessation of property tax policy uncertainty has led to an uptick in certainty and confidence from property buyers, particularly investors. This has been evident in a higher number of enquiries and open home attendances which has also resulted in stronger auction clearance rates.

We expect upgraders, first home buyers and investors to continue to pick up momentum over the year as mortgage rates become cheaper and listings rise in line with the traditional spring selling period.

Interest rates

One of the key drivers of higher market activity over FY20 will be interest rates. The RBA cut the official cash rate by 25 basis points in June and July to a record low of 1.00%.

The positive thing for mortgage holders is that the majority of banks and lenders have followed the RBA’s lead and reduced their rates. This will in turn increase mortgage affordability and will assist households looking to borrow more to upsize or renovate, or for first home buyers getting into the market. We buy houses in Chapel Hill.


The re-election of a Coalition federal government ensures that there will be no future changes to negative gearing and capital gain tax concessions applied to property. This now provides certainty and confidence for investors about how they structure their purchases. This increased confidence has already led to higher levels of investor interest and is set to push higher as banks get more comfortable with the new normal in terms of regulation and lending practices.

First home buyers

Many first home buyers have been sitting on the side lines, saving for a deposit, over recent years waiting for the right time to jump into the market. Interest rates at record lows, recent property price declines and a new federal government deposit scheme will ensure that first home buyers ramp up activity over FY20 to take advantage of the current market environment.

The current environment for those considering selling to upsize or downsize, is now highly positive. A number of banks are offering mortgage rates below 3.00% and post-election confidence from buyers has risen; however, listing numbers are yet to rise in line with the recent pickup in inquiry. This creates a captive market for savvy home owners looking to achieve a solid price for their home before the traditional spring selling period.