Do you need landlord’s insurance if you already have a comprehensive insurance policy on your investment home? This is a question that homeowners often ask, and experts will tell you insurance is always a good idea. Landlord’s insurance gives you extra coverage that a general building policy probably won’t cover.
Like all insurances, you may never need it. But if something major should go wrong, you are likely to be incredibly grateful you took it up. While every policy is different, here are some examples of how landlord’s insurance can make a huge difference to your outcomes.
Damage and theft cover.
Your building insurance probably covers you for accidental damage in a natural disaster like a fire or flood (if you’re not sure, maybe check this with your current home insurer). However, there could be a shortfall when it comes to malicious, deliberate or accidental damage to your home by your homemaker or their invited guests. A good landlord’s insurance policy can bridge this gap and ensure you don’t have to fit the bill. Landlord’s insurance can also cover replacement or repair of your curtains, carpets, blinds and light fittings in the event they are damaged or stolen. You may also be able to cover damage to your furnishings or the building caused by pets.
Compensation for loss of rent.
You may think that the bond held with the Bond Authority should cover loss of rent. However, there are many scenarios where the bond wouldn’t cover your out of pocket expenses. For instance, if your damaged property needs extensive repairs these could take months to complete. If a prolonged period of missed rental payments is going to leave you strained financially, then an appropriate policy is probably money very well spent. Insurance policies can also cover you if your homemaker is in hardship as well as various other unexpected situations and the cost of a policy can be as little as $290 per year.
Reduced rent cover.
Damage to your building or contents could leave some of your property unusable for some time. This situation may require you to reduce your rent to cover the period your homemaker doesn’t have full use of the property. Some policies will allow you to access an option to cover the shortfall between the reduced rent and your usual rental income.
An option to cover legal expenses.
If you have a situation where there is a need to go to court, this can be an expensive exercise for you as the homeowner. To cover this type of scenario, you can opt to add in coverage for legal expenses to the policy.
While this list is by no means exhaustive, it does outline some of the important scenarios to consider. You may also find that a unit or townhouse has different insurance needs compared to a house. It’s a really good idea to check your prospective landlord policy in detail, to understand what it does and doesn’t cover so you are informed as well as insured. Reading this in conjunction with your usual building insurance policy is also advisable. That way, you can make sure you’ve got the right cover for your needs.
For more information on choosing the right policy, we recommend doing some research and speaking to your Property Manger about their experiences is a great place to start. If you’re just starting out, this article Do I Really Need Landlord’s Insurance has some great tips. This Terri Scheer factsheet is also well worth reading up on.