If you are anything like me, the moment the subject of insurance comes up your eyes will automatically start to glaze over! Boooring!!!! I agree, but I’m begging you, please stay with me on this.
Like all insurance policies the hope is you will never need to make a claim, but as is life, things inevitably can go wrong, and when they do, having the right insurance policy in place can make an enormous difference to the eventual outcome.
Most property investors I know and deal with on a day-to-day basis are not super wealthy people, but the majority are hard-working people just trying to get ahead and create a financially comfortable future for themselves and their families. So, what happens to these investors in the unlikely event of a tenant doing the runner owing weeks and weeks of rent, or the property suffering major damage caused by a tenant or some other event outside of the landlord’s control, rendering the property untenantable for an extended period. These things could prove to be catastrophic to a lot of investors.
Now let me be clear, the likelihood of you having to make a claim is very low, particularly if you have your property managed by an effective property management department, but the likelihood of your house burning down is very low also, and you wouldn’t not have your home insured.
What does landlord protection cover?
*Disclaimer: Not all policies are the same! But typically, they will cover the following:
- Loss of rent – Eg in situations where the building can’t be lived in after damage or loss. Ie busted pipe causing the property to flood, house fire, or tree collapsing on your house etc.
- Rent default – Covers you for your tenant leaving without notice, failing to pay rent or refusing to leave when served with an eviction notice.
- Damage by tenants – covers you for the repair of malicious damage caused by tenants, or their pets, theft by tenants, accidental damage to specified contents.
- Contents – Even though you will likely be renting the property unfurnished this will cover you for damage to carpets, curtains, light fittings, blinds etc caused by things such as fire or flood, theft by intruder, water damage etc.
- Liability – Covers you for claims made against you for injuries suffered on your property, eg tenant slipping down stairs or a visitor to the property tripping on your carpet.
- OTHER – Depending on the cover you choose other things the policies can cover include; Legal liability, Tax Audit, clean-up costs associated with illegal drug protection + more.
The annual cost of a landlord protection policy is less than 1 weeks rent for most properties, approximately $350 – $500 per annum, and of course that is a tax-deductible expense. Considering the items above covered, and the peace of mind that comes with this cover than I would suggest it is excellent value.
Now, a very important point to consider is, not all Landlord Protection Policies are the same!! Managing a large portfolio of investment properties as we do, we have dealt with many insurance companies. They are all great when it comes to signing up for a policy! They are NOT all great when we unfortunately have to make a claim.
Best advice we can give you on this, is of course do your own homework, also ask your Property Manager, they are on the front line and will have dealt with most of the major players over time.
As a guide we have found the companies that specialize in LL Protection insurance are typically the best. Ie: Terri Scheer, EBM, and AON. But as I said do your homework and take the time to read the T&C’s
Hopefully you stayed awake long enough to read this. Last word! You are an investor right! Well Landlord Protection Insurance is a great investment in both your piece of mind and the protection of your investment income! Just Do IT!
Lee Waterhouse
Property Investor
General Manager
Property Central – Penrith