It is always a good time to mull over the benefits of landlord insurance, whether you already are a landlord or considering renting out your property at any stage.
Knowing what you are covered for and whether that level of cover remains right for your circumstances is really important.
Landlord insurance allows you to insure either
– Building only
– Contents only or
– Both the building and contents
Below is a short summary of what your landlord’s insurance would cover. It is always wise to sensibly go over with a fine-tooth comb “the product disclosure statement (PDS)” to make sure everything that’s relevant to your investment property is covered.
- Building – Building insurance covers damages to the structure of your property. It can be offices in these residential buildings, domestic outbuildings including garages, carports, sheds or fixed coverings to walls, floors (including floating floor boards) and ceilings. It could also be retaining walls, fences or gates.
- Contents – contents insurance covers items within your property that are not fixed or fitted to your buildings such as internal fixtures like carpets, curtains, dishwashers and light fittings, as well as furniture and other belongings if you plan on renting out a furnished home.
- Loss of rental income. If an insurable event damages your home to the point it is uninhabitable or untenantable, most insurance policies will cover the loss of rental income while it is being repaired.
- Public liability cover. Medical and legal bills can stack up if someone is injured while visiting your investment property, or even if they slip on your driveway.
- Other legal costs. Some claim scenarios may need to be escalated legally. For a landlord, this will usually involve seeking legal representation if you need to evict a tenant.
- Damages caused by tenants (accidental and malicious). Accidents come about! Renters are human, and may out of the blue cause damage to your property. This is usually covered by landlord insurance, alongside intentional or ‘malicious’ damage. These are generally two separate policy inclusions and may come with different sub-limits for payouts, so be sure to check your PDS for the differences.
Adding these extras will typically increase your premium, but are worth every cent!
- Tenant /Rent default. If your tenants stop paying rent without prior notice or vacate suddenly or even due to tenant death you can get this benefit added.
- Theft by a tenant. This provides cover for loss or damage to your rental property as a result of theft by your tenant or their guests.
- Flood cover. You may not be protected from damages caused by flooding in a standard policy, especially if your property is in a high flood risk zone.
Be sure to check your PDS for definitions of what is covered for flood damage versus storms and escaped liquid. This will help you identify if flood cover is appropriate for your investment property.
What landlord insurance doesn’t cover are the consistent expenses linked with being a landlord.
This could include gradual deterioration, depreciation, customary wear and tear, and everyday expenses, such as maintenance bills, inherent defects, faulty design, structural defects or poor workmanship.