Many property owners consider landlord insurance unnecessary, confident that only the best tenants will emerge from a stringent selection process to lease their property. And with good tenants, what could possibly go wrong with the property?
Unfortunately, this is not the reality, as many things can go wrong…even with the best tenants, accidents can happen!
Whether it be a house, unit or townhouse, an investment property is often among the most valuable assets anyone will own.
The importance of taking out landlords’ insurance was reinforced from a recent survey which revealed that two out of five landlords had experienced damage to their property from tenants, or defaulting on rent in excess of the value of the bond. (Source: Home Insurance Comparison)
While standard house insurance will cover such events as fire and various natural occurrences, landlord insurance is specifically designed to protect the landlords’ investment.
For example, landlord insurance can cover you for:
- Malicious or accidental damage by tenants or their guests.
- Theft by tenants or their guests.
- Liability for a claim made against you.
- Loss of rent if the tenant defaults on their payments or leaves early.
The same applies to investment properties that are units or townhouses, although existing body corporate insurance may already cover you for building and legal liability in public areas. Check with your body corporate manager to find out what your existing insurance policy covers.
As with all types of insurances, the cost and conditions of different landlord insurance policies on the market differs greatly, so take the time to talk with your Property Manager for information on the better companies, given their day-to-day experience in the field.
It is important to buy an insurance product based on its suitability rather than price, and to clearly understand what is and isn’t included. For example, some policies will cover only “malicious” damage made by tenants and not “accidental”. Often there are strict conditions that apply to covering defaulted rent payments.
If you rent out a holiday rental, or a fully or partly furnished property, you may also need to add contents insurance to cover items such as white goods, furniture or appliances. There are also many other factors to consider.
The good news is, insurance premiums and any excess payments are tax deductible.
Yes, landlord insurance will cost you a small amount each year, but it will save you from sleepless nights wondering what will happen if the unexpected becomes reality.
For more information, speak to our highly experienced Property Management department on 4628 7444.