To some it may seem like just another expense to add to the long list of home ownership, but landlord insurance could save you a lot of money in the long run.
What is landlord insurance?
Landlord insurance is a type of insurance policy that landlords can purchase to protect themselves from some of the financial risks associated with renting out of their property. It’s quite regularly confused with building and contents insurance.
The fact is that landlord insurance is a type of building insurance but more catered to the needs of rental property investors.
Standard building insurance will generally provide cover for loss or damage to your house as a result of unforeseen events such as storms, bushfires and floods. On the other hand, landlord insurance can provide the same cover as building insurance as well as cover in the case of the tenants causing damage to your property.
What does landlord insurance cover?
The aim of landlord insurance is to provide cover for your property against loss or damage caused by unexpected events or by your tenants, whether deliberate or accidental.
Elements included may include:
- Building Cover – this covers the fixtures and fittings. Some examples include hot water systems, air-conditioners and heaters, built-in cabinetry, fencing, swimming pools, rainwater tanks, solar panels, floor tiles and even the structure itself – doors, walls and windows.
- Landlord Contents Cover – this could be big contents items such as light fittings, blinds, curtains, carpets and electrical appliances that can easily go missing (or stolen) when your tenants move on.
- Public Liability – in the case that your tenant or visitors to the property incur medical expenses or loss of income because of a public liability event within your property.
- Loss of Rent – this could be caused by tenant default, broken leases, death of the tenant, denial of access or tenant hardship.
Every policy is different and it is important to speak with your insurer about what you are and are not covered for.
Why do I need landlord insurance?
We all hope that nothing will happen to our properties but unfortunately accidents and unexpected events do occur and these may come with large repair costs.
Cyclone Debbie is an example of this with over 72,767 insurance claims being lodged as a result. Over $1.565 billion was paid by insurers as a result of this event for damages to homes.
This certainly isn’t the first-time Queensland has seen large-scale weather events and there will certainly be more into the future. While we all hope the next major weather event is a long way off, it’s important to be prepared especially when your investment property is involved.
Landlord insurance could save you significant loss in the future and that sounds like a whole lot of peace of mind for a small percentage of your rental income.