So what is Landlord insurance and why is it important?
Like any insurance, it is a safety net. A contingency plan for when unexpected things happen. Although there is no set percentage, we'll go with "in most cases" your tenants will respect your investment property and ensure the rent is paid on time.
Every landlord who owns an investment property has two major concerns. Firstly, that the rent is paid on time and secondly, that the property is well cared for, with no damage. It is our agency's focus to ensure that we are strict with the tenant selection process and reference checking; however, circumstances can often change during the tenancy.
To eliminate these concerns, it is important to consider having adequate insurance cover to protect your asset. This article is a reminder to those landlords who are exposed to these concerns by not having insurance. We still have landlords who do not have this cover and it is our duty of care to inform you of this insurance.
Landlord insurance is a specific policy designed to protect your rental income and costs associated with property damage. Various policies will cover different eventualities, so it is wise to double check what is included in your cover for your own peace of mind. There are varying excesses, inclusions and exclusions with different insurance providers that can reduce your level of cover and payout.
The most common features of landlord insurance is to cover intentional damage to your property caused by the tenants or their visitors, or cover the rent in events where the tenant does not pay. However, to assist in comparing landlord policies we have summarised some of the different components that you will need to discuss.
1. Loss of rent in the event that your property suffers damage, which makes it unable to be tenanted for a period of time
2. Damage & malicious damage (excluding normal fair wear and tear)
3. Rent default
4. Ordinary house and contents insurance (fixtures and fittings)
5. Tenant theft
6. Legal costs
7. Public liability
8. Pet damage
9. Meth damage
Landlord insurance is not expensive (compared to the possibility of lost income) and is a tax deduction to give you peace of mind. It is recommended that you do not go with the cheapest quote with this type of insurance. Take the time to compare the policies and what you are covered for, as they are all different. Some policies will only provide insurance up to a small limit, and others won't pay more than one claim in a year or won't cover you for certain events. Some Landlord insurance doesn't have any excesses for rent arrears and only apply them for tenant damage.
It is important to also note that some landlord insurances go beyond the main issues and also cover acts of nature such as storm damage, fires and floods.