Like home insurance, landlord insurance can cover your rental property and its contents against risks like storms, floods and fire. It can also cover the damage that tenants can cause to your contents – and even loss of rental income.
Landlord insurance can cover holiday rentals and long-term rentals
Without landlord insurance, you could lose your valuable investment if it’s damaged or destroyed.
You could also lose income from rent if you’re unable to rent it out during repairs, or if your tenants get evicted or break their lease.
Landlord insurance can provide you with extensive protection if your investment property suffers loss or damage. Landlord insurance automatically includes some additional benefits – and is flexible enough to cater for both short-term and long-term rentals.
The exact cover you can receive depends on the policy that you take out. But to give you an idea, here are some of the benefits landlord insurance policy may include:
|Automatic cover for flood and fire or explosion.||Automatic inflation adjustment if you need to make a building or contents claim.|
|Liability cover of up to $20 million for injury or loss of life to a third party, or loss of a third party’s property on a building you own.||Cover for loss or damage caused by tenants or their visitors (exclusions apply).|
|Automatic cover up to $10,000 for damage to landlord’s contents – like carpets, curtains, washing machines and portable furniture – and the option to increase cover for greater amounts.||Cover for loss or damage caused by electric motor burnout for appliances up to 15 years of age.|
|Catastrophe cover up to an additional 15% of the building sum insured, for declared natural disasters.||Tax audit cover (cover options of $2,000 or $5,000).|
|Environmental Upgrade following total loss – benefit additional to Building Sum Insured up to $5,000||Up to an additional 15% of the building’s total sum insured, to cover demolition and removal of debris, and architects and engineering fees.|
|Theft By Tenants||Malicious Damage caused by Tenants|
|Rental Default by Tenants leaving Property without Notice|
Each policy is different, but generally you won’t be covered:
In addition, there is a deductible/excess.
There are other exclusions which your insurance broker can outline for you.
A customer bought an investment property in Sydney’s inner west. They relied on the rent from the property to help cover their mortgage repayments. One year, they rented the property to some tenants who caused extensive damage to some of the walls, floor coverings and doors – and then left owing 12 weeks’ rent. Because the property needed repairs, Owners were unable to rent it out immediately. Fortunately, they had taken out landlords insurance and included the rent default option*. They successfully claimed on their insurance to cover their repair costs – and just as importantly, their missing rent. This allowed them to make their mortgage repayments and repair the property quickly so they could get new tenants in.
* Rent default is an optional extra for landlord’s insurance and attracts an additional premium.
Important note – the information provided here is general advice only and had been prepared without taking into account your objectives, financial situation or needs. A product disclosure statement (PDS) is available from your insurance broker. You should consider the PDS in deciding whether to acquire, or continue to hold, business insurance.