What Is Landlord Insurance?
If you’re renting out your investment property, it’s important to have landlord insurance to protect your valuable asset. You never know when accidents might happen, leaving you without the means to collect rent or even rebuild your property.
Landlord insurance can protect your investment against:
- natural disasters such as storm or flood damage
- tenant-related events such as damage, theft or unpaid rent
Finding the correct landlord insurance for your residential property will give you peace of mind that your investment will remain viable even during troubled times. What’s more,
A bond is not enough to cover most tenant-related incidents. Even if you have the best tenants renting your property, unexpected problems can still arise. Having landlord insurance in place will cover you for some of the common risks associated with renting and the resultant financial loss.
Phoenix Insurance Brokers Pty Ltd is a Western Australian Insurance Broker with over 30 years experience offering insurance protection. Over time, we’ve developed an understanding and expertise in the specific insurance needs of your business area.
Phoenix Insurance Brokers Pty Ltd will find you the best landlord insurance policy to suit your situation.
An Example of Why You Need A Good Landlord Insurance Policy
An owner rented out her property for $250 per week. A tenant moved in and paid an initial 2 weeks rent but did not pay any rent thereafter. After the appropriate notices were issued – which took a few weeks to put in place – the tenant left the property. A court application was made to recover costs and a hearing date was set down, but this couldn’t occur for a few weeks.
By the time the court hearing came around, the tenant was approximately $3000 in arrears. The court and bailiff costs plus the cost to change the locks at the property (as the tenant refused to hand over keys) came to $1075. Repairs and cleaning following the final inspection cost a further $700. The costs totalled $4775. Even after taking into account the bond of $1000, the owner was still out of pocket to the tune of $3775.
If the owner had had landlord insurance in place, it would likely have covered approximately $3000.00 when claimed.
Landlord insurance can protect you as an owner for a small, tax-deductible, annual cost. Not only will you have peace of mind, but in the event of a claim, the landlord insurance will pay for itself.
Your Phoenix Insurance Broker can find the policy that is right for your property and circumstances. You’ll be made aware of what is covered, what isn’t covered, and the excess should you make a claim.
Landlord Insurance FAQs
Landlord Insurance covers most common risks property investors face such as:
- Tenant damage– accidental or malicious damage caused by tenants, their pets or guests.
- Building cover – if the property is damaged or destroyed as a result of an insured event such as theft, fire, flood, cyclone, earthquake or storm.
- Accidental glass breakage to your building.
- Fixtures and fittings such as carpets, blinds and light fittings, fixed to your property up to a maximum value depending on your policy. You can also arrange for optional extras for landlord’s contents cover to increase your cover for partially furnished or fully furnished properties.
- Contents cover for the landlord’s belongings.
- Loss of rent – resulting from an event the insurer has agreed to cover.
- Legal liability– in case someone is injured or their property is damaged.
- Costs associated with taking legal action against a tenant.
- The cost to repair or replace a domestic electric motor when it’s damaged by an electric current. For example, if your air conditioning unit is damaged as the result of an electric current, Landlord Insurance can cover the cost to repair or replace the motor.
It is important to note that Landlord Insurance doesn’t cover every possible situation as the overload in risk would make insurance unaffordable. Insurers need to strike a balance between providing cover for the most common eventualities, while keeping their level of risk at a manageable level.
- Cost for regular maintenance such as unblocking a drain.
- Insurance may also cover the cost of repairs carried out by qualified tradies, however repairs by the landlord are generally not covered as they are not typically skilled in this area.
- Wear and tear.
- Building defects *
- Tenant contents.
- Market conditions – a landlord generally can’t claim against their insurance if they are not able to find a tenant for their property. Or claim the difference in rents achieved, for example, if they used to get $400 per week and now get $350 per week, the $50 per week loss can’t be claimed. If a landlord suffers loss of rent due to an insured eventuality, like default or denial of access, then a claim can often be made to recoup those losses.
* If your property is part of a complex, Strata Insurance will likely covers defects or damage to common areas.
There can be a huge difference in the cost of landlord insurance policies. This is because costs are based on:
- The type of property i.e. a house or a unit
- The sum you want to insure it for
- A building’s security.
Landlord insurance generally covers events that cause loss of rental income, damage or theft in your property. While your rental income may cease overnight, your mortgage repayments or the need for income won’t, so it may be critical for you to be protected against this risk. Loss of rental income may be due to tenants leaving without notice, damage caused by your tenants, or your property becomes uninhabitable due to unprecedented event occurring such as a fire or burst pipe.
Building insurance protects against damage to the property’s structure. The cover extends to more than just walls and roof; it can include your garage, outbuildings, perimeter walls and pools.
There is no legal requirement for landlords to have landlord insurance, however if your property is managed by a property manager, they are likely to strongly recommend you have cover in place as they commonly see the realities of not having this kind of protection.
Other Property Insurance products we can assist you with: