Protecting Your Rental Property: A Guide to Landlord Insurance
Protecting Your Rental Property: A Guide to Landlord Insurance
Owning an investment property can feel like a dream come true – until unexpected costs crash the party. Between natural disasters and the occasional break-in, the last thing you want is to add unpredictable tenants to the mix. After all, these things add up!
That’s where landlord insurance comes in. It’s your foolproof way to ensure that your property is protected, no matter who occupies it and what happens to it.
In this post, we’ll give you the rundown on landlord insurance essentials.
We’ve rounded up seven of our top tips to help you navigate the world of landlord insurance and make sure you’re well covered.
Let’s dive in!
1. Know the Difference Between Home & Landlord Insurance
First things first: contrary to belief, home insurance and landlord insurance are not the same thing.
Where home insurance is designed for properties occupied by the owners, landlord insurance is tailored specifically for those brave enough to rent out their properties to tenants.
In other words, landlord insurance is what’s going to protect you against risks specifically associated with renting, including:
- Tenant-Caused Damage
- Theft by tenants
- Legal Expenses to do with disputes
- Loss of Rental Income
In short, landlord insurance covers much more than a tenant’s security bond, giving you peace of mind when it comes to your rental property and insuring yourself against the risks of bad tenants.
2. Check What’s Covered
So, what exactly does landlord insurance cover? This will differ from insurer to insurer, but as a general rule of thumb, most policies include:
- Building & Contents Coverage: Protection against damage to the structure and fixed contents from things like storms, floods, and fire. Think walls, floors, roofs, and anything permanently attached.
- Liability Protection: Covers your legal fees and compensation if someone gets injured on your property and you find yourself in hot water.
- Rental Income Protection: If your property becomes uninhabitable due to damage or repairs, or if tenants default, this helps cover your lost income, so you can avoid an empty wallet as well as an empty home.
- Tenant-Related Risks: Any accidental or deliberate damage caused by tenants or their guests, along with legal expenses related to tenant issues.
To make sense of it all, check out the Product Disclosure Statements (PDS) of different policies and look out for one that suits your needs as a landlord.
3. Cover Your Bases
You might think landlord insurance is just for when your property is occupied. But actually, many policies offer coverage even if your property is unoccupied for up to 60 days.
Even when there’s no one renting out your property, you could still be liable if someone gets injured while wandering around or repairing your unoccupied space. So, it’s best to cover your bases and keep your insurance in place, even on those rainy days.
4. Watch Out for Exclusions & Optional Add-Ons
Insurance policies often have exclusions, so it’s crucial to double-check what’s included and, more importantly, what’s not.
For example, with pet ownership on the rise in rental properties, you might want to confirm that your policy covers damage caused by any furry friends. We’re talking about lingering odours, carpet stains, and the occasional scratch on the walls.
Also, check if you’re covered for expenses like changing locks due to tenant theft. Not all policies will include this and it could be the difference between a safe home and you being a couple hundred dollars out of pocket!
5. Understand That Where You Live Impacts the Premiums You Pay
Your premiums can vary based on a variety of factors, including your location. If you’re in an area known for higher rental defaults, your premiums will reflect that.
Spend a little time doing research to find an insurance policy that matches your circumstances and your neighbourhood.
6. Review & Update Regularly
Get in the habit of regularly reviewing and updating your coverage to ensure it aligns with your rental property’s current state. Keep an eye on renovations, local conditions, and changes in property value as these will all impact your premiums and excesses!
7. Ask for Discounts
Insurers love to reward good behaviour. Many of them offer perks like installing security systems, maintaining a good claims history, or bundling with other insurance policies.
Be sure to explore your options and look for discounts where possible. Knowing that different insurers also often offer a newcomer discount will give you a leg to stand on and some bargaining power. Don’t be afraid to ask!
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