Landlord Insurance – What is it and why is it necessary?

Landlord Insurance - What is it and why is it necessary?

If you own a rental property, you will need different insurance cover than traditional home and contents policies. 

Insurance is VITAL if you own an investment property. Without it, you may run the risk of being liable for any damage caused by tenants and instances where you may experience loss of rent. Good landlord insurance will minimise this risk and make your job as a landlord easier, saving you valuable time and money.

What is landlord insurance?

Landlord insurance is a type of insurance policy specifically designed to protect those who own investment properties. Insurance covers ny event that may affect investment such as theft, storm damage, or tenants not being able to pay their rent.

Landlord insurance is offered by most general insurance providers in Australia and can apply to all types of investment properties including a house, apartment, unit, or townhouse. These types of policies include a combination of landlord insurance, building insurance, and contents insurance to cover the costs of loss of rental income, property damage, and damage to what is inside the property.

What does landlord insurance cover?

A insurance policy may cover some or all of the following:

Tenancy cover

  • Damage or theft by tenants or their guests
  • Loss of rental income
  • Rent default
  • Legal expenses in the event that you have to take tenants to court
  • Liability

Building cover

Building cover will protect against damage to the building structure (including pipes, cables, external awnings, external structures, gas and plumbing, and fixtures and fittings) in the event of:

  • Fire
  • Lightning strikes
  • Storm damage
  • Flooding
  • Tree falls
  • Earthquakes
  • Explosions
  • Vandalism
  • Impact damage (if a car crashes into the home or in the event of a break-in)
  • Water damage

Contents cover

Whether your property is furnished or unfurnished, additional contents insurance can protect you against theft or damage to the contents of your home such as appliances, furniture, carpets, curtains, and light fittings in the event of:

  • Fire
  • Lightning strikes
  • Storm damage
  • Flooding
  • Tree falls
  • Earthquakes
  • Explosions
  • Vandalism
  • Impact damage (if a car crashes into the home or in the event of a break-in)
  • Water damage

You may be able to choose the excess you pay and add on additional extras including cover for when appliances stop working, civil unrest & rioting, and accidental damage.

What is not covered by landlord insurance?

Landlord insurance is a great precaution for anyone who owns an investment property. However, there are some things that insurance does not cover. These include:

  • Tenant repairs (handiwork carried out by tenants that result in damage to property structure or contents)
  • General wear and tear (including mould damage or peeling paint)
  • Building defects
  • Tenant contents
  • Market conditions
  • Run-of-the-mill expenses (such as payment for lawn mowing service or a plumber’s bill for unblocking a clogged pipe)

Do you need landlord insurance?

There is no legal requirement for landlords to have insurance, but at Strike Property, we consider it absolutely necessary. Accidents do happen, and if your property is damaged or if a tenant is injured while staying on your property, you could be up for thousands of dollars in liability claims and damage repair costs.

As a landlord, there is also a risk of a tenant defaulting on their rental payments. Changes to life circumstances or financial difficulty during economic downturns can result in loss of rental income which can affect your financial standings. Having landlord insurance will help cover these periods of income loss so that you do not have to.

Even reliable tenants make mistakes. Having landlord insurance minimises risk for everyone and saves any emotional and financial stress during a tenancy. 

Is landlord insurance worth it?

Landlord insurance is a very sensible investment if you are a property owner. One of the most significant benefits of insurance is, of course, peace of mind. Most tenants are sincere and want to do the right thing. However, accidents happen.

Whether it is a natural disaster or even a harmless game of backyard cricket, damage to your property is a possibility. Too often, uninsured landlords are left with huge bills and even legal settlements that can result in a loss of time and income which can be emotionally taxing. Landlord insurance acts as a safety net, protecting you, your property, and your tenants.

In addition, your insurance premium is tax-deductible so that you will be able to get your money back. 

There are several policies on the market to consider, but Strike Property only recommend insurers who are specialist Landlord policy providers. 

The information in this article is for general information only. It should not be taken as constituting professional advice from Strike Property. Strike Property is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.

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