Many general investment insurance providers offer cover for landlords, but you may not be sufficiently covered by many of these policies. As a landlord, what should you be thinking about when taking out an insurance policy? Here's a guide of what you need to consider:
Building
As per your home insurance, you need to ensure the structure of the building (eg roof, walls, doors, fitted kitchens) is covered for events such as fire, flooding, vandalism and theft. If you have a strata or community titled investment property, check to see if your building is covered in the corporation's insurance.
Contents
If you are renting out your property unfurnished, you may not need as much cover as a furnished property. But do think about other items such as internal blinds/curtains, carpets, light fixtures, and appliances.
Rent Default Or Other Loss Of Rent
This is probably one of the biggest points of difference between home and landlord insurance, and covers rent loss due to an insured event. You will need to check on all eventualities, but most will protect you against loss of rent due to:
• Defaulting on the rent for whatever reason
• Tenant eviction due to a court order
• Tenants obtaining a hardship order
• Unexpected death of tenant
The number of weeks you can claim for non-payment of rent may also vary between insurers; some will pay 12 weeks' rent, others up to a full year, others up to a fixed monetary amount. The excess on rent arrears can also vary, with some insurers having no excess specific to the rent arrears and some charging 2 weeks rent as an excess.
It is also worth noting that payments can often take time to kick in, which is why it is important to have a bond of four weeks rent.
Cover For Public Liability
While it's your responsibility to ensure your property adheres to the current safety requirements, you also want to ensure you're covered in case someone, for instance, seriously injures themselves in some way. Public liability insurance will often cover the associated medical and legal costs.
Other Legal Costs
These will cover you in the event you may require legal representation, such as if you need to evict a tenant by court order or make a legal claim for rental loss.
Malicious And Accidental Damage By Tenants
Accidents do happen, so make sure tenant damage is included your landlord insurance policy. There may be a separate coverage for 'malicious' damage (such as vandalism and theft), so read the policy carefully to make sure you're covered for both.
Other Considerations
Insurance policies will also vary according to the excess you are willing to pay and the level of cover you wish to receive. It's down to you to consider the risk factor and determine what aspects of your property are worth paying extra for.
When comparing quotes, don't be guided on price alone, it's often worth paying a few more dollars for the extra peace of mind. Another point to remember is according to the Australian Taxation Office (ATO), your premium could be tax deductible. Check with your financial specialist. While we cannot recommend a specific insurance company, we can advise on which companies we see landlords get the best result from when issues have arisen.