For landlords and investors, properties are significant financial assets and must be insured to protect rental income from any damage caused by tenants or natural disasters. Landlord insurance is a type of insurance that is designed to protect your investment and provide financial security against unexpected events that may cause damage and in the event of lost rental income.
We’ll explore what landlord insurance typically covers, the risks of not having it, key considerations, and what you need to know about your policy.
What Does Landlord Insurance Cover?
Landlord insurance policies can vary depending on the insurer, ranging from policies that offer basic property protection to additional specialised coverage options. Most policies cover loss of rental income, damage from tenants and building damage, which should be the minimum requirements for a landlord looking to protect their property.
- Loss Of Rental Income – Landlord insurance that protects rental income ensures that you are covered if your property is uninhabitable or if something happens to your tenant. Property damage that prevents access, hardship situations such as the loss of a job or a prolonged illness, default, or the death of a tenant are just some of the ways that you can be protected.
- Tenant damage – Finding good tenants can often be a challenge, however even if you do, challenges can always arise, and landlords need to be prepared for that. Even well-vetted tenants can leave your property in worse condition than they received it, and landlord insurance can protect from this, whether it is accidental damage, intentional damage, or damage caused by pets.
- Building damage – It’s important that your building is covered as well, as tenants aren’t the only way that a property can be damaged. Natural disasters such as floods, storms, and fires can all pose a risk to landlords, however, neighbours also pose a risk, especially in apartments or units. Particularly in a shared building, there are far more things that could cause property damage, from a leaking pipe, not turning off a tap could cause a flood, or the risk of a kitchen fire from a neighbour for example.
Risks of Not Having Landlord Insurance
For landlords, exposure to damages can lead to significant financial risks, and if you are not protected, this means having to cover the repair or replacement costs out of your pocket. As landlords have full liability, in severe cases, this could lead to bankruptcy. Legal issues are one such example that landlords can be liable for because if a tenant is injured on your property and you don’t have adequate coverage, you could be held responsible for their medical expenses and legal fees. Additionally, even if the cost of repair isn’t a concern, without insurance, if your property is temporarily inhabitable, you may not be able to collect rent whilst repairs or rebuilding is taking place, which can lead to a significant financial loss.
Key Considerations
When choosing a landlord insurance policy, it’s important to consider some of the factors related to the policy. Ensuring coverage limits are sufficient to cover the cost of rebuilding your property and replacing any belongings is essential, and if the coverage is adequate, excesses must also be considered because lower premiums may have a higher excess, which could mean paying more out of pocket for claims. Depending on the area you live in, your property may be more prone to damage from fires, floods, or earthquakes, so any natural disasters that might happen must be covered.
Although landlord insurance can be costly – especially in areas that are prone to natural disasters – it is a must to protect both your property and your tenants. By choosing the right policy, you can protect your investment and mitigate the financial risks associated with property ownership.If you have recently purchased a property or are thinking of investing, I’m here to help. Get in touch with me, Ben O’Brien, Head of Residential Management at Rose & Jones, at 0457 433 510 or via email. Let’s discuss how we can ensure your property is protected the right way.
About Rose & Jones
Rose & Jones has been helping clients find and purchase properties in Sydney, South East Queensland, and the Northern Rivers since 1998. A renowned property buyers agency across residential, commercial and industrial sectors, every one of our property experts meets our high standards, so you won’t have to compromise yours. With access to a wide network of off-market properties, our team can help you find the perfect property. Also offering property management services and investment advice, make Rose & Jones your go-to when it comes to real estate in New South Wales and Queensland.
