Landlord insurance is just a cost of doing business.
If you’re like many Australians, you might think that buying insurance for your assets isn’t really worth it.
After all, the cost of insurance for your car might be the same as repairs should you have an accident. And after you pay the excess and yearly premiums, it could be about the same over a number of years.
But what happens when you crash into a Porsche? Have you seen how many Teslas are around these days?
You’re up for big money. And let’s face it. Even the most minor accidents can end up incurring huge costs.
So most of us probably do have insurance for our valuable assets.
So why wouldn’t you have insurance for your investment property?
If you’re a property investor, there are a few reasons why you should have it. I’ll explain what you might be up for if you don’t.
Firstly, it’s tax deductable.
So it really isn’t costing you anything. That’s a no brainer. Enough said.
Now, this is a big one and you may not have even thought about it, but your landlord’s insurance will cover you for
Public Liability.
That’s right. Most policies will cover you for around twenty million dollars if things go really pear shaped on your property for your tenants. A significant injury or a death on your property is something we all hope will never happen, but if it does, you want to be covered.
It might not even be the tenant, but one of their visitors. And should there be a legal case against you, you want all the help you can get.
Public liability is something we all need when we run a business or are a sole trader to protect us against legal action in the case of accidents, injury or death. These things can happen anywhere. Best to be prepared.
Landlord insurance also covers you against rental loss.
That’s right. Now that doesn’t mean if your house is empty because you’re between leases, or because you’re renovating. It means that if there has been a storm and the roof caved in or a flood took out the downstairs bedroom, you’re covered for the period of time that it has become uninhabitable.
You’re also covered for other types of damage.
Not just from the wild weather, but also in the case of wild tenants. Tenants are protected from having to pay for the normal wear and tear that occurs to a property during its life time by state laws.
But what happens if a tenant has a dog you didn’t know about that likes chewing on the doors? Or your tenant has had a few too many people living there and one of them decided to do some minor renovations? Like put a hole in the wall?
What happens when a tenant accidentally sets the VCR on fire with an ambient vanilla scented candle and burns down half the loungeroom? Yep, that happened to a student of mine.
And they didn’t have insurance.
The tenants were all students, so of course they weren’t going to foot the bill. It cost an absolute bomb for the repairs. The bond didn’t even come close.
If they had had insurance, the costs for repairs and rebuilding would have been covered.
Malicious damage and vandalism are also covered by Landlord’s insurance.
Tenants on the run.
It’s unfortunate, and sometimes unforeseeable, but it does happen. Sometimes tenants will skip town, owing you rent. Sometimes they’ll take the furniture with them.
I have a friend whose tenant took his moving truck when he left the property. It was his business and it put a massive hole in his month.
The costs to recover the vehicle were substantial to say the least. As well the time and stress of dealing with the police. Now, if he’d been insured, at least some of those costs would have been taken care of.
Your insurance will also cover legal costs if the situation with your tenant ever gets to the Tribunal or you have to go to court.
You get the picture.
So if your rental has white goods, or a $4000 leather couch, or anything else that you consider to be valuable, like walls, you’ll be covered in the event that something happens, be it accidental or not.
So if you have investment properties, you should consider Landlord Insurance to be just a cost of doing business.
Don’t think of it as optional, or you might be up for more than you bargained for.
DB.