What insurance does a landlord need?

As a landlord, have you ever asked “What insurance do I need for my rental property?” Obtaining appropriate insurance cover should be an automatic part of your investor portfolio procedure and should be one of the key considerations for renting out your property. Insurance is a small price to pay for peace of mind and is definitely worth the cost, plus it has the added benefit of being able to be claimed as a tax deduction and is an ideal tax time tip for your investment property.

There are risks to your property that you should cover to protect yourself and your investment by establishing the correct level of cover. Watch this video as Joanne Danckwardt gives a brief overview on what insurance cover a landlord will need. 

If you're ready to discover how you can rent out your property with confidence, download our free Step By Step Checklist to Renting Your Property with Confidence.

YES, DOWNLOAD MY CHECKLIST

So, what types of insurance should you consider for your investment property?

Building Insurance

When it comes to protecting yourself financially, it’s essential that your property is adequately covered by building insurance. It covers the cost of repairs to the property if there is damage that is caused by an insured event. It is designed to cover the permanent fixtures in your property, which includes items such as the roof, ceiling, walls, floors, doors, windows, fixed cabinets and cupboards, fences, and gates. Additional structures such as sheds and pergolas are also generally covered but it is best to check these additions with the insurer.

Building insurance will generally provide cover in events such as:

• Fire
• Storm damage
• Lightning strikes
• Breakage of fixed glass
• Earthquake
• Vandalism
• Impact from falling trees

Remember that inclusions on your building insurance will differ depending on the policy and provider. Some risks are optional extras which need to be added. We encourage you to have a thorough read of the Product Disclosure Statement (PDS) so you know exactly what is covered and what is not. This will mean you should not have any surprises should you ever need to claim.

Make sure you keep your building insurance policy up to date by advising your insurer of any changes to the property, such as additions. Always determine if the insurance amount needs to be increased. Another important consideration is to consider if the property is at a high risk of events such as flooding. Do not assume that your building insurance will cover these risks as policies vary and you may need additional cover. Speak to your insurer about your situation to ensure that you have the right level of cover in place.

For strata titled properties, building insurance is included in the body corporate fees, so owners just need to ensure that they have adequate cover the property’s contents.

Contents Insurance

As a landlord renting out a property, it is advisable to have cover for the contents within the property such as carpets, curtains, light fittings, etc. It is always advisable to double check your policies to see if contents are included in your building or landlord insurance.

Landlords Insurance

Landlord insurance is a policy that is designed to cover investment property owners for a variety of risks, including loss or damage caused by tenants. Unexpected events do occur, and even the most well-meaning tenants can default on their rent or accidentally damage your property. Whilst tenant reference checks can be carried out for a tenant’s history, you cannot predict the future which may include your tenant losing their job, suffering a long-term illness or a relationship breakdown. These are all common occurrences that can affect the tenant’s ability to pay rent. There is also the risk of unforeseen disasters or events, such as fires and floods, that may damage your property. A Landlord Insurance policy could save you considerable losses in the long run.

The types of events that a landlord insurance policy may cover include:

• Theft or burglary by tenants, their guests or other burglars
• Malicious damage or vandalism by tenants or their guests
• Loss of rent due to tenant default or breaking of the lease or if the property becomes unliveable after an insured event
• Legal expenses required to evict a tenant

Features to be aware of in a landlord insurance policy include:

• Damage caused by a tenant’s pet

• Public liability cover for injury to someone visiting your investment property
• Rent loss due to an insured event, such as a tenant defaulting on their rental payments, death of a sole tenant, or the eviction of a tenant by court order
• Re-letting expenses after a claim on rental loss
• Removal of a tenant’s goods after a claim on rental loss
• Change of locks after a claim on rental loss
• Legal costs related to a tenant eviction by court order or a claim for rental loss

Some landlord insurance policies could include landlord contents cover, which could cover items such as light fittings, blinds and curtains, carpets, and electrical appliances.

If you own a strata titled property, another benefit of Landlord Insurance is the public liability cover. Body Corporate public liability insurance may only cover common areas, and does not include public liability cover for the landlord inside the individual property itself. This means you could be left out of pocket should your tenant or their visitors incur medical expenses or loss of income as a result of a public liability event within your property.

Items to check when purchasing landlord insurance include the terms and conditions of the policy, what it does and doesn’t cover, and the excess that applies if you make a claim. These details may vary from policy to policy, so looking around and reading the product disclosure statements (PDS) is a good idea.

It is worth noting that typical landlord home and contents, and landlord insurance policies do not generally cover the possessions of the tenant within the property. We recommend that our tenants take out their own contents cover for their possessions.

When looking at insurance, we strongly recommend that you seek professional advice from your insurer or broker, and speak with your accountant about the potential of a tax deduction. You should also be able to gain insights into insurance for your investment when preparing your questions for your Property Manager.

Please be aware that this is general advice only. For more information specific to your individual financial circumstances, speak to a trusted professional and make sure to consider all of your options before making any final decisions.

If you're ready to discover how you can rent out your property with confidence, download our free Step By Step Checklist to Renting Your Property with Confidence.

YES, DOWNLOAD MY CHECKLIST

If you feel you could benefit from our experience with property management, we’d love to hear from you. Simply reach out.  I hope that has helped you today. If you have any questions, I’d love to talk to you. My number is 0426 264 771. I look forward to talking to you soon.