Tips & Solutions

The ins and outs of landlord insurance

Purchasing an investment property can be exciting. Working through the checklist of tasks you must complete to ensure you and your property are ready and compliant for new tenants can also be overwhelming. One factor often overlooked or underestimated is landlord insurance. How important is it really to be covered against unforeseen circumstances during the lifetime of your investment?

What is landlord insurance?

Landlord insurance covers your investment property against unforeseen events that may occur during or between tenancies. It covers incidents such as damage, theft, costs associated with a lease breakage, rental default and any eviction costs that may be incurred.

The most beneficial policy will include extra coverage for public liability in case anything should occur to the property’s tenants and/or guests. It protects you against environmental events like storms, fires, and floods.

Risks versus benefits

Any investment comes with risks. You may be fortunate to have an investment property that never has tenants who default on their rent or damage your property. Your property may also be well located to avoid the adverse effects of severe weather events, but there is always that element of risk in the what-if.

With the market and weather constantly changing, protection against the unknown greatly benefits those with landlord insurance. Whilst your property manager may thoroughly screen applicants before tenancy approval, accidents can happen, and circumstances can change that can’t be predicted. If your tenant stops paying their rent, breaks the lease or damages the property, you can have peace of mind knowing your landlord insurance will cover any expenses you may incur.

Keep in mind that strata building insurance policies will only cover building facilities and not your apartment. Therefore, should an incident like a kitchen fire, flooding from a burst pipe, or excess mould occur, you will need your policy to cover the cost of contents, repairs and potential compensation to the tenant.

Most bonds equate to four weeks’ rent which is payable upfront at the beginning of the lease. If your property is damaged by the tenant, in the worst-case scenario, this may not cover any rent arrears, cleaning, or damage repairs. Landlord insurance will have you covered.

What costs are involved with a property investment?

There are many specialised landlord insurance policies on the market, and the costs of policies vary depending on the state the property is located in and its value.

It’s always beneficial to shop around for a landlord insurance policy that ensures you find one that suits not only your budget but also your circumstance. As a basis, search for one that covers loss of rent, pets, malicious and accidental damage, and natural or otherwise disaster events.

The excess will also affect the overall cost of the premium with a lower excess increasing premium. Work out what you need the insurance to cover and how much that may cost to repair or replace.

Then weigh whether a higher excess is necessary or you’d be better off with a lower excess. Consider things like pools with broken pool pumps, weathered fences that may need replacing if they fall, or luxury fittings and finishes like high-end flooring that might get damaged. What would it cost to replace or repair?

Need advice?

We can help with all those things that you may not already know. You don’t have to be an expert in investing, you just need to know who to call.

Jaime is a seasoned Senior Property Manager and Director with over two decades of expertise. She excels in negotiation, delivering impressive outcomes for her clients. Her focus lies in Sydney’s East and Inner West, with a profound understanding of their distinct features, which she has acquired throughout her career.

She is a top-notch professional known for her proactive approach, attention to detail, and excellent communication and organizational skills. Her performance-driven mentality and efficient yet calm demeanour result in exceptional service for both landlords and tenants.

Book your one-on-one, obligation-free consultation with Jaime now. Call her on 0488 600 168 or email jaime@vogueproperty.com.au .

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