Is landlord’s insurance really worth it?

Is landlord’s insurance really worth it?

Danielle Gavin, Department Manager of Property Management at Peter Blackshaw Manuka, discusses the importance of landlord’s insurance and its benefits.

Investing in property is generally a very sound financial move, but ensuring its ongoing monetary value can be a little more difficult without proper landlord’s insurance in place. Danielle Gavin has over fifteen years of experience in property management and constantly emphasises the paramount importance of being properly insured to all her clients.

What is landlord’s insurance?

Landlord’s insurance is an insurance policy specifically designed to protect landlords from common risks that can be associated with renting out an investment property. Most policies will cover owners from incidents such as:

  • Accidental loss or damage to the property
  • Deliberate damage by a tenant
  • Flood, storm or fire damage
  • Pet damage
  • Defaulting tenant

A tenant’s circumstances can change and affect their ability to pay rent, or alternatively a property may be unsuitable for rent due to unexpected damages. Most landlord’s insurance policies will cover loss of rent for the owner should a situation like this occur.

Is landlord’s insurance compulsory? Do I really need it?

Landlord’s insurance is not legally required but is very strongly recommended by most Property Managers. Danielle suggests taking out an insurance policy as soon as you purchase an investment property.

“We always take care to select responsible, reliable tenants who will care for your property, but we know accidents happen and you want to be insured if they do. Without landlord’s insurance, you are open to financial risk, particularly if you’re still paying a mortgage and relying on your rental income. If you insure your car and your own home, why wouldn’t you insure your investment property and protect one of your most valuable assets in the process? For a relatively low premium, landlord’s insurance could save you a lot of money should the worst happen.”

My investment is in a Strata-titled complex…aren’t I already covered by building insurance?

Although your complex may have building insurance, you are unlikely to be covered for the items inside your property, such as carpet, floorboards, fixtures and shower screens.

“Building and landlord’s insurance often provide very different cover. My advice would be to check with your Strata Manager and confirm what is covered by the building insurance policy. Often, building insurance policies cover damage to common property and the structural parts of a building, such as external walls and roofing. Damage to carpet may not be covered, and without a landlord’s insurance policy, an owner would have to foot the bill.”

How do I choose an insurance policy?

Investors should research multiple policies and compare the features and benefits. Danielle suggests researching insurance providers who cater specifically towards landlords, like Terri Scheer.

When researching insurance providers, Danielle recommends asking:

  • What is the excess on the policy?
  • How much rent is covered in the event of unexpected rental loss?
  • What is covered under the policy?
  • What is the process of making a claim?

“Every property is different, so it is important that you do your own research to find a policy that meets the needs of your particular property and your own needs. As Property Managers, we can provide you with general advice, but always recommend speaking to the insurance provider directly for more information”.

To find out more about landlord’s insurance and some common risks you should consider, contact your nearest Peter Blackshaw Real Estate office.

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