What is landlord insurance and why do I need it
Landlords, ahoy! Buying an investment property is a super exciting time – until something goes wrong and the property that should be making you money starts costing you moolah instead.
Enter landlord insurance. It’s the coverage you need to make your investment property work for you financially, while reducing your stress and minimising any worry or doubt you may have about your new or existing tenants. Phew!
What is landlord insurance?
Landlord insurance assures you are protected from loss or damage, and is best taken out prior to welcoming tenants into your home. Like any type of insurance, there are varying degrees to landlord insurance that determine what is covered in the event of an incident.
In taking out this insurance, you are protected against insured events that can lead to damage or theft of your investment property, as well as cover you for any loss of rental income.
What types of landlord insurance is available?
Before signing up for landlord insurance, determine what you need covered. For example, do you need coverage for the building alone, or are there contents that could be damaged or removed by a tenant such as an oven, furniture or blinds?
With three types of landlord insurance available including Building Cover only, Contents Cover only, and Combined Building and Contents, it is important to make a thorough assessment of your investment property to ensure you are covered for all the parts that matter most – should anything go wrong.
What happens if a tenant destroys my property?
We hear horror stories about tenants from hell pulling doors off hinges, smashing windows, leaving cigarette burns in the carpet and more. While this really isn’t the norm when it comes to inviting tenants to live at your property, it is an unfortunate risk you take as a landlord.
Luckily, if you were in such a predicament where a tenant significantly damaged your property, many landlord insurance policies will actually cover both the damage caused by tenants and any loss of rent associated with it – including if the home becomes unliveable as a result of the ruin.
Before signing up for landlord insurance, always ensure you understand what you are signing up for and what you are getting in return, so that you can protect yourself from big surprises and even bigger expenses down the line.
What is rent default and does it apply to me?
Existing landlords who have experienced a tenant refusing to pay rent, or tenants who have vacated their investment property without the required notice will tell you that having rent default included as part of their landlord insurance was the best decision they ever made in their investment journey.
Say for example a tenant moves out earlier than expected, leading to a loss of income where you would normally use that notice period to advertise the property to new tenants. Now you’re left for weeks on end with an empty property and no rental income. Having rent default included in your landlord insurance policy provides you with stability of earnings so you take the time to find the right replacement tenant for your home.
But what if I have good tenants?
While most tenants try to maintain the property’s integrity in order to get their full bond back at the end of their stay, accidents happen. That’s why I suggest taking out landlord insurance that includes things like liability cover, water damage, accidental glass breakage and the like.
Whether it’s the kids playing a game of cricket in the backyard and a ball goes through the kitchen window, or a dining chair pulls a long thread from the carpet, you will want to avoid forking out excessive amounts of money and rest easy knowing this is covered by your insurance.
We know that being a landlord can be a risky venture – especially if you don’t adequately cover yourself. So before you start looking for a new tenant, explore your landlord insurance options and don’t sign up until you know 100% it is the coverage that will get you out of hot water when accidents and inevitabilities strike.
Want to cover yourself with landlord insurance but not sure where to begin? We know some of the best landlord insurance options going around town! Give us a call on (02) 8916 6172 or shoot us an email at firstname.lastname@example.org. Our friendly team will be happy to talk you through the options best suited to you.