The importance of getting landlord insurance.

As a property investor, insuring yourself against unforeseen costs from your investment is a prudent move, and the best way to do this is with Landlord Insurance.

Just as in every aspect of life, a myriad of things can go wrong when it comes to your investment property or a tenancy.

Our many years of experience have taught us that even the most meticulously chosen tenants can have a fundamental change in their life which affects their ability to pay their rent whilst living in your investment property. Changes such as a relationship break down, a death in their family or of the renter themselves, loss of a job, an accident or health issue which incapacitates them, the list goes on and on.

These unforeseen changes in circumstance can have a catastrophic effect on your income and so it is vitally important that you protect yourself against the unknown. While we all know that insurance is not something that most people enjoy purchasing, you should not have a renter living in your investment property without holding a valid Landlord Insurance policy.

Here is a breakdown of what Landlord Insurance Policies may cover (subject to your particular provider, always read the PDS before purchasing) and why you need it.

What is Landlord Insurance and what does it cover? Simply put, Landlord Insurance usually covers the items not covered in your building insurance, which, if you were living at the property, would be covered by your contents insurance and issues specific to the tenancy such as loss of rent or malicious damage.

There is no legal requirement to have Landlord Insurance as a property investor, but it is highly recommended. Many rental providers are prepared to risk not holding a valid Landlord Insurance policy because they believe the bond held will be enough to cover any issues. While this might be the case in some instances, there are many circumstances where the bond won't come close to covering the costs of loss.

Depending on your policy, most Landlord Insurance will cover the following:

• Malicious damage caused by the renter or their visitor
• Any items stolen by the renter
• Loss of rental income due to a renter defaulting on payments
• Legal expenses if a renter issue proceeds to court or VCAT
• Contents cover against severe weather events
• Contents cover against natural disasters
• Public liability cover ( e.g. if a visitor injures themselves at the property)

It should be noted that general wear and tear is not covered by Landlord Insurance. For more information on Wear and Tear damage to a rental property, read our previous blog on it here.

If I have regular Building Insurance, am I covered for the same items if renting the property out?

The answer to this is a resounding NO. Building Insurance only covers the building for specified issues and Contents Insurance is specific to the policy holders' contents if they're inhabiting the home. You need Landlord Insurance to ensure you're covered for issues relating specifically to a leased property. Even if there is incidental damage to the home not caused by the renter (i.e. flooding, fire, storm damage, etc.), regular Building Insurance won't provide you with the protection that you require as an investor.

I'm planning on renting out my investment property as an Airbnb. Does Landlord Insurance cover me?

You'll have to read the fine print, but generally, Landlord Insurance doesn't cover you if you're using your investment property as a short stay (Airbnb, Stayz, etc.). It is strictly for long-term rental stays only, although there are companies that provide short-stay-specific insurance.

Is Landlord Insurance tax deductible?

Yes, Landlord Insurance can be claimed as u tax write off as long as your investment property is occupied by a renter. If it is only rented out for part of the year, you will only be able to claim a portion of the insurance. You may be able to speak to your provider and suspend your policy if you are aware that you are not going to have a Renter in place for an extended period of time.

How much does Landlord Insurance cost?

There is no hard and fast rule as to the cost of Landlord Insurance, as it will differ depending on the property type, the property's location, the value of contents, the comprehensive cover you receive, and the insurance company itself. It is however crucial that you research what your policy covers. The old saying that you get what you pay for is no truer than when it comes to insurance.

It is best to get a variety of quotes from different insurance companies to ensure you are getting the best Landlord Insurance policy. If you want any guidance on what companies to contact, or any further information on Landlord Insurance in general, please contact our experienced and knowledgeable Property Manager team. Give us a call, email us, or just pop into the office to have a chat.