Do I need Landlord Insurance for my investment property?

Why landlords insurance is so important as written in this blog by Sam price from Templeton Property Brisbane.

You have purchased a great investment property and have a tenant moving in soon. What else do you need to arrange? The agent will have talked to you about general cleaning, carpet cleaning (don’t forget to ask for a receipt), smoke alarms, maintenance and gardening, but what about insurance in case something goes wrong?

Given you probably have a mortgage over the property, it’s most important to protect both the structure and improvements as well as the income producing ability of your investment property. Just like Income Protection Insurance or Key Person Insurance, Landlords Insurance is there to assist you if something goes off the rails with the tenancy.

What is landlords insurance?

Landlords Insurances is a special type of insurance designed for owners of investment properties that are being leased to tenants. Whilst the owner is responsible for the day to day maintenance of their property as well as emergencies, this insurance is designed to protect you from tenants that cause malicious damage or fail to pay their rent.

What does Landlords Insurance cover?

It can include:

  • Malicious damage by a tenant or their guest
  • Loss of rent
  • Theft by a tenant or their guest
  • Liability for claims against the owner
  • Insurance for contents if covered in the policy

Building Insurance is not Landlords Insurance

Many people believe Building Insurance is sufficient to cover their investment property, though Building Insurance doesn’t cover you for accidents and incidents in relation to the tenancy. Most of these policies also exclude ‘contents’ which includes things like carpet floor coverings, air conditioners etc.

When should I take out Landlords Insurance?

You ideally would like the policy to commence on the start date of the tenancy, therefore we recommend taking out the policy whilst the property is being advertised for lease, alternatively, as soon as the General Tenancy Agreement is signed and prior to the tenant moving in.

If your property already has a tenant in place – that’s perfectly fine and we would still recommend taking out a policy as soon as possible, which would commence immediately, providing you with cover from that day on.

What does it cost?

We see costings range from the low $300’s to $400 with around the $336 being the current price from one of the more popular companies.

What to look out for?

Every policy is a little different from the other, so take a little time to compare the differences and be sure to confirm that a reasonable sum is included for ‘Contents Insurance’ – even if the property is leased without furniture, remembering that things like floor coverings, air conditioners, window furnishings and parts of the kitchen are often excluded from ‘Building Insurance’ .

Special Note

  • Landlords Insurance, Contents Insurance and Building Insurance usually don’t apply insurance for the tenant’s possessions, therefore your Property Manager should encourage the tenants to take out their own Contents Insurance;
  • Landlord Insurance is recommended for most types of residential tenancies including houses, units and townhouses;
  • For a claim to be fully paid, it is important that the Property Manager has undertaken their job professionally and thoroughly, as the insurance companies will often ask for copies of documentation including the Entry Condition Report, General Tenancy Agreement, Routine Inspection Reports, Bond Lodgement Reports etc.

Summary

We highly recommend that each investment property has Landlords Insurance to ensure that both the property and the income of the property is protected.

If you’re interested in learning more about Landlords Insurance and who our clients are choosing to use at the current time, please don’t hesitate to call or email us.

Written by Sam Price – Director at Templeton Property.

At Templeton Property, our property manager’s and buyer’s agents go above and beyond to secure the best outcomes for our clients. Discover more about we can assist you by calling us today on 07 3368 1988 or Sam Price directly on 0418 159 993 to discuss your needs.