Landlords Insurance: What You Need To Know
Posted on 05 September, 2018
Generally, when you own your own home, taking out insurance on your property is something that is done without a second thought. However, many who purchase an investment property may not think about taking out landlords insurance – and may not necessarily see its value until too late.
Most Home insurance policies will cover the owner against Loss of Rent by a tenant should the premises be rendered Uninhabitable resulting from the occurrence of an insured event, such as a Fire. But there are generally two notable exclusions which make a standard Home policy not suitable for Rented Properties:
- Standard Home policies do not cover Malicious Damage by Tenants; and
- The standard policy does not cover Rent Default or Theft by a Tenant.
BE AWARE that one insurance policy being marketed strongly to Landlords only covers the gaps in the standard Home policy cover for rental properties but you still need a standard Home policy to cover the major risks to the building such as (Fire, Explosion, Water Damage, Storm, Earthquake etc.) Some people might not realise they need both policies to be properly insured and maybe face ruin if the worst happens and the building is uninsured. Donnellys take the hassle and the risk away by providing Landlords with one comprehensive cover so you won’t be caught out.
The first thing you should know is that the majority of insurance policies will cover in case of a destructive storm, fire, or other natural disasters, in case of theft, and it will also cover fittings and fixtures and the building.
However, you may want to keep in mind that insurance will not cover for thoughtless tenants who don’t really care about your property or preserving it the way you would like.
One Comprehensive Polic Tailor-Made For Landlords
We can offer you Landlord insurance options that can be selected to tailor different levels of cover required for residential property investors including:
- Building cover;
- Contents cover;
- Optional Rent Default
- Optional Theft by Tenants
Policy Key Features:
- Comprehensive Accidental Loss or Damage cover including malicious acts by tenants.
- Contents provided by the Landlord for Tenant’s use cover up to $12,500 for the repair or replacement of furniture & furnishings; fixtures or fittings; carpets, curtains & internal blinds
- Property Owner Legal Liability cover up to $20 million is included automatically
- Rental replacement cover after an insured event up to 12 months is included automatically
- Removal of Debris after an insured event is covered up to 10% in addition to the building sum insured
- Loss of Rent due to Prevention of Access cover up to 12 months is included automatically
- Fusion of electric motors repair or replacement cover for appliances up to 15 years old
Let’s look at what landlord’s insurance does cover:
- Damage caused by tenants, such as broken walls or ceilings
- Damage caused by pets
- Replacement of locks if they are damaged beyond repair or you believe they may have been duplicated
- Water damage, perhaps from leaks or burst pipes
- Rental default, such as when a tenant is late on rent for a significant amount of time or simply doesn’t pay
- Legal liability. This would be useful if someone was injured or died, on your property. This could also cover damage caused to another person’s d public liability covers.
- Clean up costs in case of major damage, such as significant rubbish pile-ups or graffiti.
- Theft or burglary committed by tenants, or any guests of the tenants
- Legal costs due to eviction notices
Protect From Unseen Risks
Landlord’s insurance protects you and your property from potentially unseen risks from tenancy and is a must for any landlord looking for peace of mind for their investment property.
Now, it’s true that this insurance is going to cost you extra money every month – money you may not necessarily be willing to shell out of pocket – but you also have to keep in mind the fact that disagreements and problems between landlords and tenants are costly situations too, and can have costly consequences-
While there are plenty of lovely people who make excellent tenants, there are also disrespectful people who will cause problems, and you want to give yourself a safety net in case something does go wrong.
In addition to this, it is a distinct possibility that your insurance premium is tax deductible, so you may be able to get your money back. If you are diligent about keeping receipts and handing them over to your accountant, you will be able to get a bigger tax return.
Landlord Insurance differs significantly to regular building insurance- the main difference being that, as a landlord, you are able to claim loss of rent. Loss of rent coverage includes situations such as where a property is un-tenantable if the tenants have absconded if there is a default in rental payments, no vacant possession, the death of a sole tenant, malicious damage, and the list goes on.
There are many landlords insurance providers in the market, so it pays well to shop around and do all the research that you can.
If you do decide to take out landlord’s insurance, remember that not all policies are the same, so you have to pay attention to the details and the differences between them. Some will cover everything, while others may require you to take out a separate home & contents insurance package.
If you would like more information about any of the above articles, Donnellys would welcome your enquiry on (08) 8236 7789.
Note: This information is provided as general advice only to readers as a guide to Australian insurance policies. You should not rely solely on this information for your own situation and need to read the policy and PDS for any insurance that you are considering buying to ensure it suits your circumstances.
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