LANDLORD INSURANCE

The egg on face report

Landlord insurance

I regularly find that landlords object to taking out Landlord insurance on their investment properties as they see it as an additional unnecessary expense and they don’t see the benefit in it. But like all insurance, it is very important to have it and not need it, rather than need it when you don’t have it.

This article is part of a series outlining the most important facets of preparing your investment property.

The 9 most important steps are:

  1. Arrange A Bond Clean by A Professional
  2. Water Compliance
  3. Smoke Alarm Compliance
  4. Pool Safety Compliance
  5. General Maintenance and Repairs
  6. Gardening – Clean Up and Tidy Up
  7. Landlord Insurance
  8. Carpet Cleaning and Pest Control
  9. Have Photos Taken

In this issue we cover: Landlord insurance

Now we all like to believe we live in a perfect world and that we will have perfect tenants and nothing unfortunate will happen to the rental property. But given all the things that can go wrong, is it really a risk you are willing to take?

The fact is landlord insurance can make all the difference to the financial success of your investment property.

Landlord Insurance covers you for all tenant-related losses, such as loss of rent when a tenant breaks their lease or suffers financial hardship, or damage caused to your contents by tenants, or damage by pets. Very often, the bond won’t be enough to cover these costs and building insurance won’t cover these issues.

Landlord insurance building cover protects against loss or damage caused by tenants to fixtures and fittings and contents cover protects you against damage to carpets, electrical appliances, curtains and light fittings.

When choosing your landlord insurance policy, you must carefully consider what is included and excluded and the excesses payable at each event.

 When comparing companies, you should ensure they protect you from:

1.Loss of rental income due to:

  • Absconding tenant 
  • Defaulting tenant 
  • Failure to give vacant possession 
  • Death of a tenant 
  • Hardship 
  • Untenantable property 
  • Prevention of access 
  • Rent reduction 

2.Damage to contents such as:

  • Curtains,
  • Carpets,
  • blinds
  • light fittings

3.Events such as:

  • Flooding 
  • Storm or rainwater 
  • Escape of liquid 
  • Fire or explosion
  • Break-in vandalism or theft 
  • Pet damage 
  • Scorching 
  • Impact 
  • Earthquake 
  • Glass breakage 
  • Lightning 
  • Oil leakage from any heater
  • Electric motor burnout 
  • Riot or civil commotion

4.Loss or damage to the building :

  • Tenant Damage 
  • Pet damage 

You should always read the Product Disclosure Statement (PDS) and ensure you understand what is covered and what is not covered and the excess that may be payable for each event. The cheapest insurance may not always provide the best value for money as they may have higher excesses and don’t cover everything.

As Landlord Insurance is a tax-deductible expense and relatively inexpensive, I believe it is a vital part of preparing your property for rent, as you will have the peace of mind that your investment is protected against significant losses.

We have experience with a few different insurers and although we have no preference, the majority of our clients currently use Terri Scheer as they specialise in Landlord insurance and pay out 99% of claims.

Compare them here:

Terri Scheer

Canstar

How much is your home worth today?

HOW MUCH INCREASE?

I’ve had some buyers tell me …”Yeah I know, the market has gone up a hundred grand.” Others say it’s up at least 10%. One thing is for sure, the lagging indicators of sale prices that find their way to the surface two or three months after settlement are not reflecting the current hype in the market. The official national figure for 2021 year-on-year dwellings growth is 5.9%.

WHAT DO WE DO?

Over the long-term real estate always seems to go up in value. So why sell now? Maybe you shouldn’t. Maybe holding on to solid assets that are rising in value is a good plan.

One of the benefits of an improved market is that it takes up the slack from previous problems. There were a lot of people that bought properties at the very peak of the market just before the GFC hit. Many of them were still sitting on assets two years ago that were worth less than they paid eleven years earlier.

Maybe this boom will allow them the liquidity to sell and move on.

Another old maxim is, “Buy in the gloom, sell in the boom”

Where are you in the financial cycle of your life? Are you feeling young and still accumulating all you can get your hands on, or is it time to take the win and set up for some golden years?

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