Landlord Insurance: What do you get?
Do you have an investment property which is being rented out to a tenant? Jessica and Daniel had purchased their first investment property in Sydney’s inner west. They had made many improvements on the property prior to leasing it out.
On their first inspection they found that their property had been badly damaged and abandoned by their tenants. The property now had graffiti on several walls and the tenants had destroyed many of the windows and doors. Fortunately Jessica and Daniel both had Building and Landlord Extras Cover, which allowed them to recoup their losses.
Landlord insurance is an important safety net which provides security for the money you have invested. It provides you with peace of mind that your property will be kept in good condition, even if something detrimental occurs in the future.
Most standard building and landlord insurance policies do not cover malicious acts or theft by tenants, loss of rent due to default by tenants, denial of access to tenants by Government Authority and legal expenses due to loss of rent. However, some insurance providers offer cover for the above as an optional extra. It is important that you consult with your insurance provider to ensure that the policy you have is the most suitable for you.
Landlord insurance policies can be expensive. However, there are a number of ways in which you can reduce your premium. Some examples include:
- Obtaining multiple policies with the same insurance provider
- Increasing your building’s security (this can be done by installing deadlocks, keyed windows, security screens or bars and local or back to base-alarm systems)
- Choosing a higher claim excess
- Having a no claims history
- Choosing a lower level of cover
It is also preferable that you have a rental agreement with your tenants. Although it is not necessary to obtain a rental agreement in order to obtain a landlord insurance policy, it is a requirement to provide one as evidence in order to make a claim in certain circumstances (e.g. for loss of rent if your tenant breaks their lease). Rental agreements should specify the term of the lease, the amount of rent payable and the amount of bond paid by the tenant(s).