6 Tips to the right Building & Landlords Insurance. Are you covered?
As a professional investor, it is vitally important that you are aware of risks you may be exposed to with your rental property and of the availability of insurance policies to protect you against many of these. The two main types of insurance you need to ensure you have in place are building insurance and landlords insurance.
If your property is a unit or apartment, with an owner’s corporation in place, check that the building insurance policy held by your owner’s corporation covers you for the minimum requirements which should cover reinstatement and replacement insurance of buildings on common property, and public liability insurance for the common property. If your property is a standalone house you will need to organise your own independent building insurance policy.
Further to your building insurance policy to ensure you are covered for your contents (fixtures & fittings) and protection from any situation that may arise in relation to the tenancy in your valuable asset. A comprehensive Landlords Insurance policy takes the risks and stress out of being a landlord and having a suitable policy in place could help provide peace of mind if the unforeseen should occur. Under current tax laws landlords insurance is claimable for investors. There are a number of products available but not all policies cover you for all possible scenarios.
6 tips to checking your current policy covers you.
- Get the right insurance for you - The most common risks for landlords are; loss of rental income, malicious damage by a tenant, theft, accidental damage, and legal liability. As a landlord it is important that you ensure the policy you choose covers you for these needs.
- Cover yourself for loss of rental income – Loss of rental income can result from absconding tenants, defaulting payments, death of a sole tenant, failure to give vacant possession or a court awarding a tenant a release from the lease due to hardship. In instances when malicious damage has been caused to a property, a loss of rental income may result during the time the property is being repaired or cleaned. Choosing a policy that covers these scenarios ensures a steady flow of rental income.
- $10,000,000 in Legal Liability – This covers any expenses incurred if a lawsuit arises as a result of any persons suffering bodily injury or property loss where the landlord is found responsible. We insist that your property must be covered for a minimum of $10,000,000 of legal liability.
- Malicious damage – Covers everything from holes punched in walls and doors that have been kicked in, through to intentional damage to carpets and floors.
- Accidental Damage – This covers unintentional damage to a property. It might include the accidental breakage of a window or the spilling of red wine on light colored carpet. Accidental damage does not cover gradual “wear and tear” that has been sustained over time.
- When Periodic, the insurance needs to continue - Make sure your policy will cover you even once the fixed term agreement has expired and your tenants are on a periodic tenancy agreement, some policies will also cover you for legal expenses and professional fees relating to an investment property audit undertaken by the Australian Tax office.
If you would like some assistance in organizing a landlord’s insurance policy to cover the above or further advice please do not hesitate to contact your property manager.
Posted: Sunday, 24th May 2009 at 8:25 pm
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