Nobody plans to ever have to make a claim under a landlord insurance policy.
However as we all know, life is unpredictable and sometimes we just get unlucky: whether it’s a bad tenant, a natural disaster or simply a freak accident. These events can put a property investor at risk of thousands of $$$ of repairs and lost rent – losses which can be avoided through purchasing landlord insurance.
If you’re a property investor you might be wondering whether it is worth spending an extra few hundred dollars a year on insurance – after all, it eats into your rental income. In this post, I will cover some common questions relating to landlord insurance.
What is the difference between landlord insurance and home insurance?
It can be confusing when there are so many property-related insurances on the market to understand what they actually cover. It is always important to read the product disclosure statement (PDS) carefully to determine whether a policy provides an appropriate level of cover.
Traditional home insurance is generally limited to damage to the physical structure of a building as a result of specific events such as fire, flood, storm or earthquake. In addition, strata-titled properties already have their own building insurance paid for via strata fees.
Landlord insurance is specifically designed for investment property owners and covers losses relating to the lease of a property such as:
- Loss of rent due to tenant default
- Costs involved in evicting a tenant
- Accidental and malicious damage to a property and its contents
- Theft of owner-owned furniture, fittings and fixtures
- Death or injury of a tenant
For example, if your investment property is damaged in a bushfire, a home insurance policy would cover the cost of repairing any structural damage caused by the fire. Landlord insurance can go further to cover repairs to internal fixtures and fittings, as well as loss of rent whilst the property is unhabitable. This can be a great help – especially if counting on your rental income to meet your regular mortgage payments.
Why do I need landlord insurance when my tenant already pays a bond?
A bond will often not cover all of the expenses you are legally entitled to when a tenant leaves. Landlord insurance ensures that you are not out of pocket, for example, when a tenant leaves without paying their last month’s rent but there are still repairs to be done. Having to chase up a tenant for these costs is expensive, stressful and unfortunately, often unfruitful.
Landlord insurance can also cover events that aren’t the responsibility of a tenant such as natural disasters and claims made against you by your tenant for injury.
What to look for in a landlord insurance policy
Whilst the cost of a policy should be factored in, it’s important not to underinsure yourself. Click here to read more
Neil Carstairs is the founder of Mortgage Corp, an active property investor and awarding winning MFAA credited finance broker with more than 10 years mortgage broking experience. Currently, Neil is one of only 19 MFAA Certified Mentors in VIC/TAS region.
Neil specialises in helping successful professionals and investors build & grow your property portfolio through strategically structuring your loans for long-term investment success. He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not.
Thanks to his dedication to clients’ success, Neil has consistently receive 5 star client reviews and has been called, by his clients, “Miracle Mortgage Man” “Trusted Friend, Mentor and Educator” “God-send”…
To find out more about Neil Carstairs and Mortgage Corp, visitwww.mortgagecorp.com.au