Landlord’s Insurance is one of the most important purchases a property investor can make, so why do so many landlords assume they don’t need it?
For a few hundred dollars a year, you can cover yourself and your property to not only buildings and contents, but also for rental default and damage by tenant, malicious or accidental…because let’s face it, accidents do happen.
Depending on the property and location, it is important to make sure you get adequate cover for your situation.
A common misconception is that building insurance will cover a property being leased, however it won’t. In a unit, the body corporate is responsible for the building insurance but that does not cover anything inside your unit. With a house, you need to cover the land, as well as the building and contents which is why the cost of landlord insurance is considerably higher. For example, if your property floods, the contents such as fittings and carpets would not be covered, potentially leaving you a with a hefty and unexpected bill.
Even if your property is rented unfurnished, you need to consider cover for your property such as floating floor boards, carpets, curtains, light fittings and other furnishings for fire, theft, burglary, storm and water damage in addition to deliberate, accidental and malicious damage.
Another extremely important element of landlord insurance that may not be covered in other policies is loss of rent and rent default. Even the best property managers (**cough Managed), with the most stringent tenancy application checks and a zero tolerance for arrears, can’t predict the future. With this in mind it’s imperative to ensure you are covered in the event your tenant can no longer pay their rent or if the property becomes uninhabitable.
Loss of rent - Covers situations where the building can’t be lived in after damage or loss. This could be a pipe in the washing machine bursting and flooding the apartment, a house fire or a tree collapsing on your house, forcing the tenants to move out for repairs.
Rent default - Covers you for your tenant leaving without notice, failing to pay the rent or refusing to leave when served with eviction notices.
Certain policies may also cover legal expenses, so that if a landlord ends up having to take his tenant to court, he doesn’t have to face hefty legal fees.
The benefit of a comprehensive insurance policy is peace of mind in the event of something unexpected. You’ve worked hard for your investment, so why not ensure its protected.
Just a special note that this is general information only – it is important to get advice on the right insurance for you from a licensed insurance broker and if you’re interested in find out more we can help point you in the right direction.