Landlord Insurance, are you protected?
Landlords insurance is an insurance policy that covers a property owner from financial losses connected with rental properties. For houses, the policy generally covers the building, with the option of insuring any contents that belong to the landlord that are inside.
For Strata titled units, the Strata Plan generally holds the Building Insurance with the Landlords Insurance generally being limited to contents within the lot.
In both houses and units it is common for the policy to include indemnity for a period of lost rent which can cover a number of situations resulting in lost rent for a period of time. Generally policies currently indemnify a period up to 14 weeks.
The policy will normally cover standard perils such as fire, lightning, explosion, earthquake, storm, flood, escape of water / oil, compliance, theft and malicious damage, however each insurance policy is different and may or may not include all these items. We would urge all property investors to review your policy and confirm all inclusions and exclusions.
With some Insurance providers optional coverage may include accident damage, terrorism, legal protection, alternative accommodation costs, contents insurance, rent guarantee insurance, and liability insurance.
Landlord Insurance policies typically do not cover any personal property belonging to tenants, or otherwise protect the interest of tenants; despite a liability policy protecting a landlord or property manager will be of benefit to tenants should they incur a loss for which the landord is liable.
A number of insurance policies will only cover the investment property if it is managed by a licensed managing agent.
Those who hold a Landlord Insurance policy and self-management may not be covered should an incident occur and a claim be lodged. It is best to confirm the details with your insurer now before it is too late.
When weighing up the cost vs benefits, often engaging a specialist managing agent is the lowest Risk option, so why expose yourself …
Checklist to cover yourself:
a) Is your policy up to date?
b) Is your property compliant (eg smoke alarms serviced)
c) Is your Property Manager knowledgeable about your policy / changes
d) The fine print, check what is and what is not included
After you have checked all the necessary points then a strictly stress free property management experience can be felt. Without these points you may one day find yourself facing massive repair bills and an investment that leaves a sour taste in your mouth – lets avoid that!