Landlord Insurance, can you survive without it?

To some it may seem like just another expense to add to the long list of home ownership, but landlord insurance could save you thousands in the long run. As investors, our aim is to minimise risk and make the most out of our investments so investing the money in landlord insurance really does make sense.

What is landlord insurance?

Landlord insurance is a type of insurance policy that landlords can take out to protect themselves from some of the financial risks associated with renting their property.

It’s quite often confused with building insurance, with few people knowing what the difference is between the two. The fact is, landlord insurance is a type of building insurance but more catered to the needs of property investors.

Standard building insurance will generally provide cover for loss or damage to your house as a result of unforeseen events such as storms, bushfires and floods. Landlord insurances on the other hand, provides the same cover as building insurance as well as cover in the case of the tenants causing damage to your property.

What does landlord insurance cover?

The aim of Landlord Insurance is to provide cover for your property against loss or damage caused by unexpected events or by your tenants, whether deliberate or accidental.

This will include:

Building Cover – this covers the fixtures and fittings. Some examples include hot water systems, air-conditioners and heaters, built-in cabinetry, fencing, swimming pools, rainwater tanks, solar panels, floor tiles and even the structure itself – doors, walls and windows.
Landlord contents cover – this could be big contents items such as light fittings, blinds, curtains, carpets and electrical appliances that can easily go missing when your tenants move on.
Public liability – in the case that your tenant or visitors to the property incur medical expenses or loss of income because of a public liability event within your property.
Loss of rent – this could be caused by tenant default, broken leases, death of the tenant, denial of access or tenant hardship.

Why do I need landlord insurance?

We all hope that nothing will happen to our properties but unfortunately accidents and unexpected disasters do occur and these come with large repair costs.

Cyclone Debbie is testament to this, with over 51,000 homes in Queensland’s south-east affected by the storm. One area of Brisbane received 646mm of rain in just 24 hours. By March 30^th, 2500 insurance claims were made by homeowners in Queensland for damages to their homes and as time goes on more and more claims are being made.

This certainly isn’t the first-time Queensland have seen state-wide devastation from extreme weather conditions. In the past decade, insurers have paid out more than $3.6 billion in cyclone-related claims in the golden state, and more than $3.2 billion worth of these claims were due to flooding. So while we’re all hoping the next cyclone disaster is a long way away, it’s important to be prepared, especially when our life investments are on the line.

Landlord Insurance could save you significant loss in the future and that sounds like a whole lot of peace of mind for a small percentage of your rental income.

Landlord Insurance, can you survive without it?

By Joel Davis, Strategic Director.