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February 22, 2021

How landlord insurance can protect your property investment

There are many insurance options available to property investors and landlords, but one important insurance is frequently overlooked: landlord insurance.

Landlord insurance is a great investment for property investors who want to ensure their property and rental income are protected. After all, renting a property is not without risk – smart investors manage and mitigate that risk by utilising the best insurance options.

What is landlord insurance?

Like other insurances, landlord insurance works as a safety net to protect tenanted investment properties from the risks – in this case, the risk of renting. It’s designed especially for investment property owners and incorporates additional protection for damage and theft to contents and household items as well as rent default and other tenancy related risks.

Landlord insurance typically covers events like malicious or accidental damage caused by tenants, loss of rent and even legal fees incurred from court proceedings with a tenant.

Why do I need landlord insurance?

It’s important to protect investments by always having a contingency plan in place. Even the best tenants may run into hard times, so landlords shouldn’t hang all their hopes on finding and retaining tenants who will take care for their property and always pay rent on time.

Landlord insurance is an affordable way to protect property and assets that landlords would otherwise be liable for if damaged or stolen.

Being prepared saves time, money and stress.

What isn’t landlord insurance?

Building insurance and a tenancy bond is not landlord insurance.

These insurances will only cover damage to a building and four weeks’ worth of rent. This may be sufficient in some cases to cover your loss, but certainly not all.

Likewise, if a landlord owns a strata property, building and public liability will not cover the contents of the property (e.g., appliances, carpets, etc.).

What’s covered by landlord insurance?

Not all landlord insurance policies are created equal – landlords should always verify their policies to ensure they’re receiving the coverage they need. Landlord Insurance may be an additional option as part of a Building Insurance policy or more commonly a standalone product, often where there is a separate building insurance policy.

Some common elements of landlord insurance include:

  • Tenancy

This covers rent default, loss of rent, damage or theft by tenants or guests and legal expenses and associated expenses such as lock changing and bailiff for eviction and other tenant-related court fees. Specialist policies also often cover losses following the death of a tenant.

  • Contents

Commonly, this may cover accidental and malicious damage to the contents of the property (appliances, furniture, carpet, etc.) from tenant, guest or pet. Theft or contents

  • Legal liability

This covers events such as injuries or death on a landlord’s property, usually up to $20,000,000.

  • Notable Extras

Specialist Landlord insurance companies may also include cover for the myriad of expenses that occur when dealing with a loss of rent claim. This extra cover can include the property being untenantable, death of the tenant, tenant release from their lease in the case of family violence, legal expenses ( such as court application and attendance as well as bailiff and other eviction costs such as storage of tenant goods), prevention of access, tax audit expenses and loss of rent due to accidental or malicious damage.

What’s not covered by landlord insurance?

Landlord insurance will not cover general wear or tear and damage inflicted by the tenant. It may have other stipulations about what is and what is not covered.

The Landlord Insurance market features a broad array of products with vast differences in the level of cover provided. Landlords should take care to read inclusions and exclusions as well as the Product Disclosure Statement.

Common mistakes with landlord insurance

Beware! Some major insurance companies label Building Insurance policies for investment properties as Landlord Insurance, however they are often limited to just the building with no additional cover for rent default, contents, malicious and accidental damage, pet damage and theft. You must always read the inclusions and exclusions of your policy as well as the Product Disclosure Statement.

What to consider when choosing landlord insurance

Most major insurance providers offer landlord insurance, but not all are created equally. Here are some elements landlords should consider.

  • Price

It is important to choose a policy that provides good value for the price. Landlord insurance policy prices depend on things such as property value, location, upkeep and other factors.

  • Inclusions and exclusions

Some policies may not cover damage caused by natural disasters, damage caused by pets and shared property. Landlords should compare multiple policies to ensure they receive the right coverage for their situation.

  • Extras and incentives

Some policies come with incentives like extra coverage for obscure issues, such as tax audit insurance, lock replacement and re-letting after an eviction.

The best way to find a great landlord insurance policy is to know the needs of the property, then compare multiple policies to find the one that best fits those needs.

The right landlord insurance right HERE

Landlords who ignore landlord insurance may be at risk of losing money or missing out on potential return when an accident, theft or damage occurs.

Our team at HERE Property can work with you to help you protect your investment with the right landlord insurance for you and your property. With over 40 years of experience in the Perth market, we have all the knowledge and expertise needed to keep your investment safe and profitable.

Contact us today to learn how we can help maximise your property’s potential with an approach tailored to your specific situation and goals. When it comes to successful investments, good real estate starts HERE.


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