Landlord insurance can cover the common risks associated with renting out your property. There are no legal requirements for landlords to have landlord insurance on their rental property. This type of insurance policy does minimise the financial risks and provides public liability protection something that is often overlooked by owners. For example, it would protect you from being sued by a tenant should they have an accident on the premises and have grounds to claim negligence. What often happens is that when a Landlord has no insurance, the Landlord’s solicitor may try to counter sue the Property Manager. A comprehensive Landlord Insurance package covers a Landlord for loss of rent, time spent at tribunals, legal expenses, and any damage caused to the rental property. It’s advantageous in strata properties when there are limits to what areas are explicitly covered by the strata or the owner. Most owners’ corporations have insurance for the building and public liability insurance for the exterior areas of a strata building, but not for the inside of the lots. For example, if a water pipe breaks, the strata scheme will fix the pipe, but they may not be liable to pay for any internal damage to paintwork, carpets, and floorboards. There may also be a loss of rent in this situation, and this would not be covered. We’ve seen in the last year due to the Covid lockdowns, tenants requesting rent reductions or not being able to make the rent, and interim regulations preventing evictions. These events have shone a light on the importance of mitigating your risks as a Landlord.
The terms and conditions, inclusions & exclusions, and the extras and incentives are important considerations when shopping for an insurance policy.
Firstly identify any external possible risks to your property, such as flooding, bushfires, or other natural disasters that may cause damage therefore affecting the rental income.
Do you allow your tenants to have pets, is your property offered fully furnished, do you have expensive wooden floorboards or a pool? These are things that will help you assess the best insurer for your property. Also, check the public liability cover, does it include visitors to the premises, including (yourself/owner), and how many weeks will be covered for loss of rent. Once you narrow the field of possible insurers, look at the extras and incentives. For example, some policies will cover items such as changing the keys and locks or covering the reletting fees. Again, these extras will help you make the best decision tailored to your needs.
The good news is that the policy is a tax deduction as it’s considered an investment expense.