These days there is insurance for everything from houses, cars, pets, health. Merv Hughes even insured his moustache for approximately $370,000 during his cricketing days. Insurance is still one of those things that we put aside mistakenly thinking it isn’t worth it. As a landlord, it is important to protect your asset and the income you are set to derive. A specialist landlord policy is an important investment strategy.
If managed correctly, an investment property can prove to be a great investment. However, renting out a property comes with a bunch of risks. Without the right insurance in place, that financial dream can quickly turn into a financial nightmare. A specialist landlord insurance policy is designed to cover the unique risks that investment properties may face. You will however need to speak to your particular insurer what typically is and isn’t covered in different policies.
Here are 5 reasons to think about and why a specialist landlord insurance policy is a valuable investment.
A landlord insurance policy unlike a typical home & contents policy offers protection for tenant-related loss and damage. This means if a tenant defaults on rent or causes damage to the property, landlords may be able to regain the costs through their insurance. In these trying Covid times this has proved a valuable protection.
We see it all the time on the news: flash storms and damage caused by natural weather events. These are some common property insurance claims: flood, hail, rainwater run-off, storm surge, cyclone, bushfires.
As wild weather conditions are expected to continue, property owners should consider the risk of being financially exposed to substantial damage or total losses by being uninsured.
We live in unpredictable times and you cannot control a tenant’s job loss, a relationship breakdown, or their health. Around half the claims of insurance policies concern a tenant-related matter like the loss of rent, damage and theft by the tenant. Investors who have landlord insurance will usually be protected for these risks.
Isn’t the bond enough to cover tenant related risks? This is a common myth. In many cases the bond that has been collected will not be enough to cover the expenses if a tenant refuses to pay rent, damages the rental property or fails to make good on their obligation to repair the damage, or steals contents from the premises. The landlord then fits the bill and then chase the tenant for reimbursement through the courts, which can be an expensive proposition.
Protection cover up to 10’s million of dollars
We have heard of ‘legal liability’ (also known as ‘public liability’ or ‘liability to others’ and cover limits are usually in the tens of millions of dollars.
Landlords have a responsibility to provide a safe and liveable property for their tenants and anyone else who visits the property by avoiding foreseeable harm to tenants and other visitors. Harm being physical injury or damage to the person’s property if the landlord is negligent in their responsibility and someone suffers a loss as a result. The landlord will usually be held liable and may be required to pay compensation.
Legal liability provisions in a policy cover the legal costs and any payouts for which the policyholder would be responsible if they are found to be legally liable. Without the insurance, the landlord has no cover for liability incidents that occur at the rental and would face any legal and compensation bills on their own. To date, the highest personal injury claim in Australia was $19 million with half being legal costs.
Legal costs are covered
This cover is important for landlords who want to always keep control of their property. While we hope your tenancy is a breeze, if something does go wrong, there can be lengthy and costly legal disputes. Landlords can benefit from having cover that extends to legal expenses.
We have taken to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed data may impact the accuracy of this article. Always check with your specialist landlord policy advisor for what you are fully covered.