Investments are on everyone’s mind at the moment and this week, we discuss something that is often overlooked.
For every property investor, Landlord Insurance is essential. Buying an investment property is usually part of a wealth building strategy and being the landlord, you would not want to see that disappear. Landlord’s insurance is important to help protect you from certain aspects of owning an investment property including:
- Rent default – loss of rent
- Legal liability
- Theft and malicious damage by tenants or their guests
- Accidental loss of damage
- The extra costs of rebuilding such as architects fees and removal of debris
It is important to have proper protection for not only the investment property but also the belongings you provide to your tenants. The Landlord insurance is generally a relatively small cost but could save you thousands of dollars should something go wrong.
So why is it that many landlords in Australia don’t protect themselves accordingly? If you don’t organise it yourself, your property manager should make you aware of it and even offer to organise it for you. The two main reasons that a landlord should take out a landlord insurance policy in Australia is to protect them from rent default and theft & malicious damage by tenants. There seems to a be a reliance on most tenants doing the right thing, however sometimes it may not be the tenant but rather one of their guests.
Also make sure you have adequate public liability insureance. Remember is someone injures themselves on your property you are liable. Many landlords who own units or townhouses within community titles believe they are covered under the Body Corporate. NB: Body Corporate covers you in a public area. If someone breaks a leg inside your unit/townhouse you are liable – check your cover.
The rule of thumb with risk is to insure what you can’t afford to lose. So, be sure you are protected and take out the necessary landlord’s insurance. Failure for a tenant to pay rent for a few months could see significant financial stress on your circumstances which could ultimately lead to forced asset sales.
Seeking cover for buildings and contents, loss of rent and legal liability needs to be at the top of your list of priorities and so does understanding the policy terms and conditions that are set out in the policy because the types of loss for which you are covered are defined clearly and it’s only those losses that are covered.