Being a landlord is a great position to be in, it means you have invested in a property and are now able to recoup some of the costs by having another party pay for its use. Although it may seem like money for nothing, that is actually far from the case, being a landlord comes with a lot of responsibilities, and along with those come liabilities.
Fortunately, there is a way for landlords to protect themselves! If you are thinking of renting out a property the first thing you should do is ask for a landlord insurance quote and start the process of obtaining a policy that will keep you and your interests safe in the event of a variety of negative scenarios.
Landlord insurance is a policy designed specifically to protect the owners of investment properties. It can provide coverage for events that adversely affect your investment like property damage, theft, or tenants who don’t pay their rent. Landlord insurance can be applied to many different types of investment properties including an apartment, a house, townhouse, and more.
So, what does landlord insurance actually cover? Most policies cover some or all of the following:
- Damage or theft by tenants and/or their guests
- Tenancy cover
- Rent default
- Loss of rental income
- Legal expenses if a tenant took you to court
- Liability
In addition to those, having building coverage as an option will more thoroughly protect you from physical damage to the building’s structure. This includes external decking and awnings, pipes, cables, walls, roofs, gas and plumbing, along with fixtures and fittings. The insurance will apply in the event of the following:
- Storm damage
- Lightning strikes
- Flooding
- Tree falls
- Fire
- Explosions
- Earthquakes
- Vandalism
- Water damage
If you happen to be renting out a fully or partially furnished home, then you can obtain additional contents insurance that will protect you against theft or damage to your home’s contents- things like furniture, home appliances, carpeting, blinds and curtains, and light fixtures and fittings. This coverage will take effect in the event of the same unfortunate instances occurring as those listed just above!
Your next question might be what isn’t covered by landlord insurance? While landlord insurance is an excellent and highly recommended precaution to take, there are a number of things that it doesn’t cover, which include:
- Tenant repairs – These are repairs that are carried out by the tenants that go wrong, resulting in the property structure or contents being damaged.
- General wear and tear – This includes damage from mould and old, peeling paint.
- Tenant contents and effects
- Building defects
- Everyday expenses- These include items like payment for lawn and landscaping services or paying a plumber for repairing a leaky pipe.
- Market conditions
And now for the next question, do you really need to invest in landlord insurance?
Landlords are not required by law in Australia to have landlord insurance, but one has to consider the potential outcomes if you don’t have it. Accidents happen, so if a tenant is injured while residing on your property, or if your property itself sustains damage, you could end up facing thousands of dollars in liability claims and repair costs!
Another problem that landlord often have to deal with is the risk of a tenant defaulting on their rental payments. This unexpected loss of rental income can have an adverse affect on your financial standings. If you have landlord insurance it will help to cover you during periods of income loss so the burden isn’t all on you.
If you are a property owner and are renting space out then having Landlord insurance is an extremely sensible investment to make. The biggest benefit that landlord insurance will bring you is the peace of mind that comes from knowing you are covered if things go wrong. Damage to your property is always a possibility, be it a natural disaster like a flood or a tenant’s backyard barbecue gone wrong resulting in fire damage, if you aren’t covered you will be liable and left holding the bill, and those can add up fast!
Landlord insurance gives you a big safety net, it protects you, your property, and your tenants from a wide variety of costly problems, and is very much worth investing in for your economic and emotional well being!
