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Landlord insurance is a vital part of protecting one of your most valuable assets: your investment property. A landlord insurance policy can protect your building, fixtures and contents, as well as provide additional options for tenant default and theft. Here are five vital things to look for in a landlord insurance policy to ensure you are properly covered.
Does the policy cover building, contents, or both?
When choosing your landlord policy, you will usually be able to select whether you would like to cover your building, contents, or both. If you are opting for building landlord insurance only, check that your policy includes fixtures such as air-conditioners, dishwashers, and fans. Otherwise any significant damage to your property will leave you substantially out of pocket. If your property is furnished, you’ll want to consider contents insurance. Contents insurance not only covers loose items, but will usually also protect movable swimming pools or spas, carpets, curtains and removable light fittings.
Are you covered against the most common natural events?
Natural events can devastate your property in a matter of minutes, so make sure you’re properly protected. As a minimum, check that your policy covers fire, storm, and impact damage. If you’re in an area where flooding is possible, you’ll also want to look into flood cover. Most policies will allow you to add this as an additional extra, subject to certain eligibility criteria.
Are you protected against legal liability?
Most people don’t consider legal liability when choosing a landlord insurance policy, but it is one of the most expensive costs a property owner can face. Legal liability cover will protect you against claims arising from injury to another person or their property, caused by or within your investment property. Check your policy doesn’t just cover the claim, but also pays out reasonable legal costs and expenses incurred.
Does your policy cover rental loss, and if so, for how long?
Rental default is usually an optional extra in landlord insurance policies, however it is one of the most widely claimed benefits of landlord cover. When adding on rental default, check how many weeks of rent are covered by the policy; would this allow enough time to find new tenants? Also, check that the policy covers the total amount of weekly rent, not just part, and whether there are any limits on the amount of rent covered.
When a tenant leaves after default, what else is covered?
When tenants fail to pay their rent, or leave without notice, loss of rent is not the only expense you will face. You may even need to pay legal costs, such as court fees, to get an appropriate order against your former tenants. Check which of these expenses are covered by your policy. Legal expenses in particular can run into thousands of dollars, so check if these are included, and if so, what limits exist on recovery.
Landlord insurance can be complex, and working out what is covered is not always easy. Talk to a landlord insurance specialist by getting in touch with Allianz Insurance to find a policy that best meets your needs.
Allianz Landlords Insurance is issued by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL 234708. We do not provide advice based on any consideration of your objectives, financial situation or needs. Terms, conditions, limits and exclusions apply. Before making a decision please consider the product disclosure statement available here.
In real estate, insurance is a contract or policy that protects an individual or entity’s property from damages and losses, receiving reimbursement from an insurance company.
A landlord, also known as a lessor, refers to an individual that owns a leased property.