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What you need to know about Landlord Insurance

If you're an investor and looking for ways to protect your property, Landlord Insurance may be a good choice. It can not only help put your mind at ease, cover for both your investment property and contents that you lease out to tenants from loss or damage caused by flood, fire, storm, theft and any potential damages or financial losses that may be incurred by tenants. We break down what you need to know about landlord insurance to help you work out whether it’s right for you.

What does Landlord Insurance cover?

Becoming a property investor is a huge achievement, but it comes with a lot of responsibility. Renting out a property you've worked hard to acquire involves trusting someone else to take care of it. This means there’s always going to be an element of risk – even among the most responsible of tenants.

 

Landlord insurance is a lot like building insurance or building and contents insurance, but it can also cover you for a number of common risks associated with renting out your property such as:

●      Malicious acts, burglary or theft by tenants.

●      Legal expenses incurred as a result of a tenant failing to pay rent.

●      Damage to your property caused by pets. (Note: In some states and territories, such as Victoria, it’s illegal to refuse pets without a valid reason.)

●      Denial of access to tenants by a government authority.

●      Loss of rent due to a tenant not paying rent. (Note: Some landlord insurance policies do not provide cover if your tenant is unable to meet rent obligations due to financial stresses caused by COVID-19. Talk to your financial institution or insurance provider to find out how they can help.)

What happens if you don't have Landlord Insurance?

Landlord insurance isn't always mandatory, but it may be a requirement for an investment loan. Regardless, it’s well worth the investment. Without it, you may be liable for any damages caused by tenants, their guests, and pets. This could result in out-of-pocket expenses like paying for unforeseen repairs – if their dogs scratch at the door frames when they want to go out for a walk.

 

While you can try to mitigate the probability of incidents by carefully screening prospective tenants, it's unfortunately not a foolproof strategy. Even reliable and honest tenants can hit hard times and end up defaulting on rent. And accidents can happen to anyone. For example, if a tenant injures themselves on your property, you may find yourself having to pay a hefty liability claim that could run in the hundreds of thousands of dollars.

 

So, if you're relying on rent as income or to cover your borrowing costs, landlord insurance for a rental property could help you recover financial losses that may occur.

What to look for in a Landlord Insurance policy

Just like any other type of insurance, finding a policy that's right can take time. It's important to read the terms and conditions in the product disclosure statement (PDS) carefully, find out what is and isn't covered and ensure you know what the excess is in the event you need to make a claim. Here are a few things property investors should keep in mind when shopping around for landlord insurance.             

1. What is and isn't covered

One of the key things to look for is the extent of your coverage. When comparing policies, check to see if the policy or the optional inclusions cover the following:

●      Legal costs associated with evicting tenants.

●      Burglary or theft by tenants or their guests.

●      Vandalism or damage to your property caused by tenants, their guests and pets.

●      Damage caused by natural disasters. This is an important one if the property is in an area prone to things like flooding and fires.

●      Public liability cover in the event your tenant, someone else, or even you get injured while at your property.

●      Loss of rent in the event your tenant defaults on their payments.

2. How much it costs

When it comes to landlord insurance policies, the price can vary substantially. It often depends on a number of factors, such as the property’s postcode (some are considered riskier than others), the condition of your property, what the walls are made of, the roof material, and how old it is. Keep in mind that the more you spend on landlord insurance, the bigger the chunk that comes out of your rental income. At the same time, you tend to get what you pay for so the most affordable policy may not cover everything you need.

3. Extras and incentives

Taking a look at what extras and incentives a landlord insurance policy offers can help you make a decision if you're having a hard time deciding what policy to go with. Some policies may cover things such as replacement of locks and keys, emergency storage of contents and repair of fixtures and features not covered in other policies.

 

While finding landlord insurance that's right for you can be overwhelming, doing some thorough research to find a policy that covers your investment can save you a lot of time in the future. 

 

Need Insurance?

If you’re looking to learn more about landlord insurance for your investment property, find out how we can help.


Read more

How much landlord insurance cover do I need?

When you’re a landlord, insurance is more than just another piece of paperwork. It’s important protection for the investment you’ve worked hard for and the future security that means for you and your family.

Should a landlord get building or contents insurance?

What type of cover should a landlord get for their investment property?

 

Things you should know

The information contained in this article is general information only and is not specific to any product.  

It does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs to these factors before acting on it.

Terms, conditions and exclusions apply to any insurance product. Please read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement, before deciding.

^ Premiums payable by instalments may be subject to minor adjustments due to rounding, and financial institution transaction fees may apply.

1 A Landlord Extras claim will only be paid if you’re able to provide certain documents and evidence such as:
•    A written rental agreement
•    A documented booking confirmation (for casually-let properties)
•    Documented property inspection reports.
The rental agreement should state the term of the lease, the amount of rent and bond payable by the tenant/s.

Landlord Insurance is issued by Allianz Australia General Insurance Limited ABN 99 003 719 319, which is a corporate authorised representative of Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL 234708 (Allianz Insurance). Westpac Banking Corporation ABN 33 007 457 141 AFSL 233714 arranges the insurance under a distribution arrangement with Allianz Insurance, but does not guarantee the insurance. This information does not take into account your personal circumstances. Read the Product Disclosure Statement to see if this insurance is right for you.

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