Investment properties normally are a solid and proven way to create wealth. Tenants are tied to written agreements with good and safe processes, but every now and then you may end up with a rotten egg taking up residency in your property.
This is when you’ll be pleased to have landlord insurance, but make sure you’ve got the right one in place.
Boutique Property Agents’ property manager, Bradley Jacobs, says that there is much debate about landlord insurance.
“Whether you need it or not, and more importantly, what to consider when selecting the right policy,” the PM adds.
Here are six points to consider to get an insurance edge to your investment portfolio.
“Okay, we may be starting with an obvious one, but always check the terms and conditions,” Mr Jacobs says.
“It is important that you know inside out what is and isn’t covered in the policy.
“Always check your policies’ inclusions and exclusions. Premiums are often filled with other features and inclusions that you may not have been initially aware of.”
2. Cost it
Pay attention to the cost of your landlord insurance, Mr Jacobs says, as you don’t want your premiums to take up a large sum of your rental income.
“This doesn’t necessarily mean that the cheapest premium will be the best. Avoid getting caught out with nasty surprises by researching and comparing different premiums. On average, Sydney landlords are only paying 1.5 per cent of their rental income on their insurance.”
Consider beforehand, Mr Jacobs says, the level of insurance you may be after.
“Different levels of coverage are required whether you are renting out a furnished space or just a building,” the PM says.
Pets have the potential to do a lot of damage to a property, so be sure the policy covers accidents or damages caused by animals.
Mr Jacobs says that it is important to always consider the location of your property for specific risks.
“Is the area prone to flooding or cyclones? These factors will come into play when deciding on a price and level of coverage of your premium.”
6. All risks
“Does your policy help protect you from theft, malicious damage/vandalism, loss of rent due to tenant default and legal expenses, if required, to evict a tenant?” Mr Jacobs adds.
“An unlikely situation, but it’s priceless to know you are covered.”