Just like we protect ourselves with life and income protection insurance, and our home with building and contents insurance, it is important to adequately protect our new investment property with not just building insurance but with landlords insurance too. Many investors make the very costly mistake of assuming that building insurance is sufficient, however building insurance does not cover anything that the tenant does wrong (by this I mean; damage to your property or non-payment of rent).
Most insurance companies offer landlords insurance as an add-on package to building insurance if the property will be an investment. There are also a few companies who offer a standalone landlords insurance policy that you can arrange in addition to your building insurance policy (so the two policies could be with two different companies in this case). As with any type of insurance cover, the wording and events covered can differ greatly between companies so it is important to read through the policy carefully as it could save you a lot of money if you ever have to make a claim.
The cost of landlords insurance varies between providers however as a guide, it will generally be between $240-$350 per annum (remember this is in addition to your building insurance), depending on where the property is located, what type of property it is and how much you will be receiving in rent from your tenants.
The below items should definitely be covered in your policy:
Malicious or intentional damage to the property by the tenant and/or their guests.
Rental Loss or Default
Reimburses the landlord for any rent the tenant does not pay and the associated costs to evict them if necessary.
Covers when the tenant or their guests injure themselves on the property (ie. a faulty light switch).
Theft of items or damage during a break in.
There are some items that are not always covered by building insurance such as carpets or bathroom accessories so having some contents cover is an extra measure of protection.
Even though having landlords insurance may seem like a “no brainer”, take up by landlords is low. A recent survey by RACV found that only 50% of landlords who held building insurance with them also took out landlords insurance.
Don’t allow your hard work and savings to be compromised by not taking out this relatively cheap insurance that will help protect one of your most important assets.