As a Landlord you may be familiar with Landlord insurance, but do you need Landlord Insurance? The most common answer is yes, however, the reason why varies from person to person and property by property.
What Landlord Insurance Covers:
Insurance policies typically cover property damage, rental loss, and in most cases, it will pay for loss of rent or Landlord liability claims. Landlord Insurance does vary depending on the Landlord Insurance company you go with.
Landlords insurance can be fairly expensive, unlike Homeowner insurances, depending on the level of Landlord Insurance needed. Landlord Insurance can cost between $300-$2000 annually, so Landlords make sure to get insurance quotes for Landlords policies before they decide to purchase Landlord Insurance.
All of Locate Property’s clients have a certain level of cover when they come on board.
The companies that we have had the best experience with are as follows:
Disclaimer: The above article should be seen as a guide only. It is highly recommended you do your own research before deciding on your Landlord Insurance company.
There is fair argument that Landlords should protect themselves and their property investments with landlord insurance if they decide on renting out their property.
Before you can decide on whether or not to get landlord insurance, you need to know what landlord insurance actually covers.
A property is a huge investment, you should be taking every opportunity to mitigate risk and maximising the potential reward.
Knowing what landlord insurance can cover is essential to be able to evaluate what kind of coverage is best suited to protect your investment.
Imagine if your tenant isn’t able to pay his or her rent because they lost their job.
This can leave you in a very tricky spot, and no matter how perfect the tenant was, it could potentially happen to anybody.
The screening process for tenants could be top-notch; you could still end up with a significant cash flow headache because your tenant is unable to pay rent.
Most landlords have mortgage payments to think about. How do you plan on paying your mortgage when there is no cash from rent coming in?
This is where Fair Rental Income Protection insurance policies come in handy, including covering loss of rent incurred from an event like a fire and your rented property is now vacant pending repairs.
This insurance policy is designed to cover damages to your rented property. It includes the following:
You are compensated for damages caused to your property by natural events like lightning, hail, storms, and wind.
Landlords are also covered for losses caused by a fire or accidental destruction of property by the tenant.
Detached property like fences and garages are covered in your insurance plan from damages caused by natural or human factors.
A landlord’s personal items that a tenant is utilizing are also covered—for instance, a lawnmower or a snowblower.
It is always a wise endeavor to insure your property from theft via burglary.
While standard landlord insurance cover property damaged by a break-in, they probably won’t cover the losses incurred by items stolen.
Property theft is usually an add-on in your landlord insurance policy that I definitely recommend.
Liability protection covers landlords from lawsuits that are decided against them.
This sort of insurance coverage is sadly overlooked but is highly essential in today’s day and age.
No matter how airtight your rental/lease agreement may be, there is always a chance that a judge or a tribunal rules against you in a court of law.
It could be caused by an injury on your property, or a safety regulation overlooked that might cause a lawsuit against you.
So it is highly recommended to investigate liability protection.
If an outsider vandalises your property, it won’t be covered by your standard property damage insurance coverage.
Getting specific coverage for vandalism can help you cover losses caused by graffiti or random acts of destruction on your property.
Rental Property Under Construction
If you are upgrading your property or giving it mandatory repairs, this insurance coverage aims to help protect the structure until it’s ready to be occupied.
New building codes are upgraded all the time, and chances are that when your property was constructed, it did not adhere to the latest building codes released recently.
If your building is being extensively renovated, you might be forced to adhere to the newly updated building codes.
This results in an extra cost that most landlords aren’t anticipating.
This insurance covers any such loss caused by recent updates on building codes.
Choose the Right Insurance Company
It is essential to choose a reliable insurance company that settles your claims quickly.
Go for a well-renowned company instead of focusing on the price.
Always understand exactly what is covered under your insurance policy in detail before purchasing your insurance plan.
You need to be aware that Landlord Insurance policies are not created equal.
It is absolutely essential that you read your policy thoroughly before purchasing any.
This is one area you simply cannot afford to take the cheaper option.
Having been in property management for many years you see the good and the bad.
Unfortunately, I have seen far too many of my clients end up in terrible situations.
All because their insurance didn’t cover the required issues when they arose..
Disclaimer: We are not licensed insurance brokers so the following information is only based on what we have witnessed over the years through our work.
Please speak to a licensed broker for investment advice.
WARNING: Don’t try to save money on your insurance coverage. The potential financial penalities of the wrong coverage are far too great.
Coverage quality differs greatly between policies and understanding exactly what you’re getting is an absolute must.
PLEASE, PLEASE, PLEASE:
- Don’t select Landlord Insurance based on price
- Read the fine print of what the policy covers so you understand exactly what you can and cannot claim!
- Recognize body corp insurance only covers up to front door
Earlier in the year one of our clients saw their house burn down, thankfully they listened to our initial recommendations.
Luckily they started out by speaking to the right people and were completely covered.
But there are still many, many instances where that isn’t the case.
This example shows the very real necessity of landlord insurance but also highlights going through a potential policy with a fine-toothed comb.
Particular phrasing like ‘malicious damage” or “body corporate insurance” are tools insurance companies use to argue out of a potential claim or by confusing purchasers who don’t actually understand what they are reading.
Do Your Research on What Your Landlord Insurance Covers
So please don’t take this as saying you shouldn’t get landlord insurance as I believe it is a must but simply that you require to be really cautious with your choice of provider and coverage.
With the right provider and policy you can rest easy that your interests are protected, but trust me in saying this is not the time to worry about getting the best price, as the risk is to great.
We hope this information is helpful to you and saves you a massive pain in the wallet in the future.