There are many types of insurance policies you need to consider when you purchase an investment property. Landlord’s insurance is one of the most important policies.
Your rental property is one of your most valuable assets and as such you need to ensure that it is protected.
You need to have protection if tenants do any damage or leave without paying their rent amongst other scenarios.
Landlords insurance can provide you cover for various issues including – loss of rent, theft, malicious damage, fire, flood storm damage and other natural disasters.
IMPORTANT – Carefully read your insurers product disclosure statement to ensure exactly what you are covered for.
Why Do I Need Landlord Insurance If My Tenant Pays A Bond?
- The bond is usually only a 4 weeks rent. This most likely won’t cover much damage to the property.
- Standard home insurance normally will not cover rental related issues (eg: loss of rent or damage by tenant).
- If you are just relying on the bond and there is a shortfall – taking legal action to recover costs can be very expensive and you may end up with nothing except a lot of legal bills.
Do I also Need Home Insurance?
Not normally – if you’ve already taken out building and contents insurance as part of your landlord insurance, you will not need an additional home insurance policy
Although you won’t be covered for building damage if you have only taken out tenant protection insurance. Be careful to read the product disclosure and define definitions.
Landlord insurance basically addresses the gaps left by other insurance.
Decide how much to insure the building for. When you’re insuring the building, it makes sense to insure it for its entire value, otherwise you would only get a partial payout if it is destroyed. This could end up costing you hundreds of thousands of dollars.
How Much Does it Cost?
This varies depending on where the property is located, if you use a property manager or manage the property yourself amongst other factors like how much rent charged, is it furnished and the size of the home.
A quick phone call or website visit can give you a quick approximate quote. Read and re-read the exclusions in your policy PDS. There are some situations where you won’t be covered.