Landlord Insurance- Manage Your Risk
Landlord insurance is your investment property safety net and should be considered a ‘must have’.
It will protect you, your family and your property from potential financial difficulties, thereby lowering your investment risk.
Nobody knows what’s around the corner. Situations change and good tenants can also change under specific circumstances. You don’t want the events in your tenants’ lives to consequently have an adverse impact on yours.
Looking for the appropriate insurance cover can be confusing and time-consuming. Take your time deciding as above all you don’t want to find out you are not covered when you need it most.
The following is a guide to the different types of cover and what they entail.
Building insurance covers:
- Replacement cost of the building;
- Demolition and removal of debris;
- Locks and keys; and
- New structures to comply with all statutory requirements.
If you own an apartment, building insurance is paid through your quarterly fees. Wallpaper and paint may not be included though and should therefor be included in your contents cover. Other items that can be added separately are things such as air-conditioning, lighting and flooring.
Contents insurance covers:
- Carpet and other flooring
- Light fittings
- Window finishes
- Manchester and linen (if supplied)
- Any furniture itemised in the tenancy agreement
- Kitchenware cabinets and appliances
- Bathroom vanity, cabinetry and shower screens
- Tap ware
- Tiling, paint and wallpaper
- Household goods such as gardening equipment
- Washing machines and dryers
- Potted plants
- Portable pools, spas and equipment
In an apartment, make sure you know which items are not covered by the strata building insurance as you may want to include them in your own insurance. In the event of fire elsewhere in the building, your unit may be affected by smoke and water damage consequently needing new paint and carpet, or at the very least cleaning as a result.
There is a wide variety of events that can be covered, including:
- Accidental loss or damage
- Malicious damage
- Fire or explosion
- Riot or civil commotion
- Water damage – leaks, rain, floods and tsunamis
- Oil heater leakage
- Accidental glass breakage
- Storm or rainwater
- Electric motor burn out
- Impact from aircraft, trains, automobiles, space debris, satellites, falling trees or branches, TV antennae, satellite dishes or radio masts
Keep your property safe from unnecessary damage by reading our previous blog: Winter is Coming- A Rental Property Checklist.
Check policy exclusions carefully. For example, some policies do not cover:
- Accidental damage caused by the tenants
- Theft by the tenant
- Damage by the tenant’s pets
- Tsunamis or other actions by the sea or rivers
Loss of rent
This covers you for loss of rent in the event that the property is not habitable and cannot be leased due to any of the events listed above.
It also covers any rent default by the tenant. However, there are usually conditions attached to a rent default claim, so check the conditions carefully.
When choosing a good tenant there are a few things to consider in order to maximise your financial return. See our blog: 3 Keys to Choosing the Right Tenant.
This relates to your legal liability as the owner. It is in regards to an event at your investment property which results in death or injury to other people or damage to other people’s property in or at your investment property.
Consider a minimum public liability cover of no less than twenty million dollars.
No matter what your appetite for risk is, having the right Landlord Insurance goes a long way to creating peace of mind.
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