Why You Need Landlord Insurance For Your Investment Property

Why You Need Landlord Insurance For Your Investment Property

Mark Taylor,

Landlord insurance is an extra cost that some landlords would prefer to avoid, but it’s essential in protecting both yourself and your property from a range of possible exposures. Here’s what you need to know about landlord insurance and why it’s important.

For some investors, landlord insurance can seem like an unnecessary additional cost on top of other payments that come with owning a property. But an investment property is an important financial asset and protecting its value is vital. Damage and circumstances out of your control can cost thousands in repairs or lost rental income, so you need to make sure you’re covered. Here’s why landlord insurance is important and what it covers for your investment property.  

What Is Landlord Insurance?

Depending on the nature of the property, landlord insurance can cover the building and/or contents from a range of perils such as fire, storm and water damage (eg: resultant damage from a burst pipe). Claims of this nature may see the property vacated and a Landlords policy would extend to include the resultant Loss of Rent whilst repairs are carried out. Property owners' liability is another standard policy inclusion.

Optional covers available under a Landlords insurance policy include default of rent, theft and malicious damage or their visitors.

What Does Landlord Insurance Cover And How Much Does It Cost? 

As with any insurance policy, costs and coverage vary. Take care when reviewing policies to ensure they meet your needs, so you’re protected if anything goes wrong. Some common things covered by landlord insurance include:

  • Malicious and deliberate damage or theft, caused by tenants or their guests
  • Landlord’s contents for unfurnished properties, such as blinds, appliances, carpets and light fittings
  • Legal expenses if you take action against a tenant
  • Legal liability if a claim is made against you for death, injury or damage to someone else’s property
  • Loss of rent while repairs are made after damage or loss 
  • Rent default, for reasons that might include the tenant leaving early or failing to pay rent

Rental Income Protection

Rental protection is a key feature often not covered by other types of insurance and one of the most important aspects, accounting for a large number of landlord insurance claims. Landlord insurance can cover you for loss of rent arising from: 

  • Rent default
  • Tenant eviction due to a court order
  • A hardship order from the tenant
  • Unexpected death of the tenant

Landlord Cover For Apartments 

With apartments accounting for 57.4% of dwellings in the Eastern Suburbs at the 2016 Census, it’s important to understand how insurance differs for houses and units. 

The main difference is in the insurance of the building itself, as this is generally covered under insurance taken out by the strata corporation. 

Another notable difference is in public liability, as strata corporation insurance is likely to cover common areas but not inside the apartment itself.

Finding The Right Landlord insurance Policy

We recommend landlord insurance policies available through Watkins Taylor Stone, with premiums for apartments usually costing less than one week’s rent. Building policies will vary in cost based on location, age and construction of the building, along with the sum insured required.

Landlord insurance is an important purchase, so take the time to carefully review any policies and consider the needs of your specific situation. It’s impossible to predict the future, but a comprehensive insurance policy will protect you against the unexpected.

For more information on landlord insurance we recommend to read how Watkins Taylor Stone can assist or contact our team of specialists today. 

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