Designed to protect your rental investment, landlord insurance safeguards your property against damages and loss – including loss of rent in the event of a household incident.
While a bond may cover small amounts of damage or loss of rent, landlord insurance covers other risks that can be associated with renting out a property and that don’t fall under a normal home and contents or strata title insurance policy.
Many landlords are still unaware and unprepared for these ‘other risks’.
According to Terri Scheer Insurance, the 2014-15 financial year so far has seen 53 percent of claims made by policy holders were for loss of rental income.
This type of insurance claim poses a great financial risk to landlords. Especially if a tenant falls behind in their rent as it can be a very long and costly process to resolve.
The second largest issue for landlords is malicious damage caused by tenants. This includes things like holes punched in walls, doors that have been kicked in and intentional damage to carpets and floors.
Landlords can end up with large clean up bills and significant replacement costs from Tenants who damage a rental property.
Other popular claims included water and storm damage, legal liability and theft.
The following are the Top 10 landlord insurance claims for 2014-15:
Loss of rent
Malicious damage
Water damage (contents)
Legal liability
Storm damage (building)
Water damage (building)
Theft (contents)
Fusion (contents) – Provides cover if a motor in a household electrical machine or appliance needs to be repaired or replaced because the motor has burnt out by electric current at the property.
Storm damage (contents)
Impact damage (contents) – Provides cover if impact by motor vehicles or water craft, aircraft, space debris or satellites, falling trees or branches or TV antennae, satellite dishes or radio masts.
Landlords should review policies upon renewal to ensure you have the right cover. Not all landlord insurance policies are the same so work out which one might suit your particular situation best.
Also be mindful if you rent out a full or partly furnished property, you may need to add contents insurance to cover items such as whitegoods, furniture or appliances.