The Importance of Landlord Insurance

When we buy a house to live in, the first thing we do is take insurance on the property as it comes naturally to us to protect ourselves and our family members in all circumstances. However, when it comes to investment property we may not think about taking landlord insurance not understanding the importance of it till too late.

However, damage caused by fire, theft, storms and even bad tenants can lead to costly repair and leave you significantly out of pocket.

Need to have a Landlord Insurance?

A rental property is an expensive investment, so you need to protect yourself from any financial losses that may arise from it.

  • Risks to the Property: can be such as fire, flood, storm damage, lightning, explosion, escape of water or oil, theft and malicious damage. All these threats can turn out to be very heavy on your pocket.
  • Risks from tenants.Landlords should be careful from the financial loss that may be incurred by tenants or their guests if the form of malicious damage to the property, steal from you, default on their rent, or lodge a claim for legal liability against you.

A Landlord Insurance covers the following in most cases depending on the insurance company that you pick and the limit on the insurance.

  • accidental glass breakage
  • loss or damage caused by earthquakes
  • loss or damage caused by fire
  • loss or damage caused by lightning
  • loss and damage caused by storms, rainwater and run-off
  • loss or damage caused by the impact of road vehicles, rail vehicles, watercraft, external aerials, animals, falling trees
  • tsunami
  • explosion
  • liability, including for a claim against you by the tenant.
  • malicious acts, vandalism and intentional damage to the property.
  • riot or civil commotion
  • theft and burglary
  • water and other liquid damage
  • loss of rent if the tenant defaults on their payments

 

What should I be looking for in a policy?

All insurance companies offer landlord insurance with a little variance, however the basic things to ensure you have cover for:

  • Malicious damage. Most policies will cover you for malicious damage caused to the property by your tenants and their guests, but you may have to pay an extra premium for this feature.
  • Fixtures and fittings. Check exactly what fixtures and fittings are included in your property cover. Most policies will generally offer protection for damage to things like pipes and cables, fixed appliances, sheds, exterior blinds and awnings and in-ground swimming pools.
  • If you choose a landlord policy that also covers some of the contents of the property, look closely at the fine print to see what is included in your policy. Note the coverage of carpets, blinds, furnishings, and light fittings.
  • Tenant default.The best landlord insurance policies will cover you when tenants default on their rent. This may happen because of a tenant’s financial difficulties, if a tenant is evicted due to a court order or if a tenant dies unexpectedly.