Why Not Having Landlord Protection Insurance Could Cost You Thousands

Why Not Having Landlord Protection Insurance Could Cost You Thousands

Why Not Having Landlord Protection Insurance Could Cost You Thousands

As a property owner you should be looking to secure your investment.

After deciding to purchase an investment property there are some major points you will need to consider, one of which is landlord insurance. You may think that landlord insurance is just going to be another expense to add to the list, but it can be well worth the price of the premium. If you never have to file a claim, which isn’t guaranteed, you could be glad you have the coverage.

Landlords are trying to save costs on agent fees and insurance, but in the process, they could be putting their valuable assets at risk. Of course, not all tenants are bad, but you should consider having insurance should something go wrong. While most tenants take good care of the property they are leasing, those that don’t may intentionally cause extensive damage, which may not be covered by a standard home insurance or body corporate policy.

Standard home buildings and contents policies do not usually provide cover for two of the most significant risks facing landlords; malicious or international damage by tenants and failure to pay rent. It’s important to remember that not all landlord protection policies are the same. Some, for instance, are designed to be taken out in addition to a typical home and contents or strata title policy, while others are tailored specifically for landlords. Some policies allow you to take out cover for the contents of the property. This can be particularly relevant if you rent out a partially or fully furnished property. Another benefit to consider is that insurance taken out to cover a tenanted residential investment property may be claimed as a tax deduction.

Landlord Insurance Coverage May Include Some Or All Of The Following:
  • Loss of rent if the tenant defaults on their payments
  • Liability, including for a claim against you by the tenant
  • Theft by the tenant
  • Malicious or intentional damage to the property by the tenant
  • Legal expenses incurred in taking action against a tenant
  • Tenant Hardship and Death of a Sole Tenant

You may still be asking yourself, “Why do I really need landlord insurance?” or “Doesn’t my household insurance policy cover the same things landlord insurance would?”

Most people also tend to think that obtaining a property manager is essentially the same as having a landlord insurance policy. Unfortunately, this is not the case. You may obtain the most efficient property manager available and there are many things that could still happen which are just beyond their control. If your tenant loses their job, is ill or dies, breaks their lease for personal reasons, or accidentally damages your property, etc. your property manager has no way of doing anything to rectify these situations. Many landlord insurance policies can provide cover for events such as these.

If you already have an existing policy we encourage you to ensure you understand what you are and aren’t covered for, the extent of the cover and any excesses that may apply.

Landlord insurance may cover:

Malicious Damage: This is generally damage deliberately done by your tenant.

Accidental Damage: Which is self explanatory, but still costly for you.

Loss of Rent: A tenant who leaves owing rent; A tenant who leaves before their lease has expired; The time taken to repair a property following damage; A tenant who refuses to leave your property and won’t pay rent.

Theft: Anything which is your property including: fixtures, fittings, carpets, curtains, blinds, light fixtures, appliances, etc.

Fire: damage to your contents, whether caused by the tenant or otherwise, should be covered by a good policy.

Plus, landlord insurance is tax deductible! Depending on your tax rate you may expect as much as 48.5% back as a tax deduction. Contact your accountant to find out more information on landlord insurance and the financial benefits to you!

Here’s what you’ll find when you come to RE/MAX Profile Real Estate:

  • Finally: A Property Management team who understands the importance of communication…and bends over backwards to keep you fully informed about everything related to your rental property!
  • An unequalled ONE-STOP Property Management service that provides online access 24/7 to your property file details, so you will always know when your tenant has paid to, inspection dates and other important information!

When you choose RE/MAX Profile Real Estate you’ll soon realise why our clients return to us over and over again because our procedures are quick and easy, highly personal and efficient.

To find out more about property management services simply get in touch with us!

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