Australia’s property market and opportunities for wealth generation can lead people to invest in a new property or properties to be put out to let. Some people may think that a rental property can be a welcome addition to your income stream.
As a landlord, protecting your rental property with landlord insurance is a smart decision. With the right coverage, you can have peace of mind knowing that your investment is protected from potential damage or loss. In this article, we will discuss the need for landlord insurance and provide tips for applying for a policy in Australia.
Why do Landlords Need Insurance?
Landlord insurance provides coverage for damage or losses to your rental property caused by tenants, natural disasters, theft, and other covered events. It also provides liability coverage in the event a tenant is injured on your property and decides to take legal action against you. Without landlord insurance, you could be responsible for paying for damages out of pocket, which could be a significant financial burden.
Some property observers claim that homeowners putting a satellite property on the rental market are not legally mandated to take out landlord insurance. However, fluctuations in property values and the behaviour of renters may necessitate such insurance.
Landlord Insurance Policy
A comprehensive landlord insurance policy should include coverage for buildings and contents, loss of rent, and liability.
Building coverage provides protection for the physical structure of your property, while contents coverage provides protection for items you own inside the property, such as appliances, furniture, and fixtures. Writing for RealEstate.com.au, Erin Delahunty stated that contents insurance also covers problems caused by tenants and/or their guests like damage to the premises, theft of property (if you furnished the place prior to rental), or legal expenses you have incurred if you were forced to evict a tenant.
Loss of rent coverage provides financial assistance if your property is unable to be rented due to a covered event, such as a fire or natural disaster. This is more critical if your property is in an area with frequent weather disturbances, like cyclones on the Queensland coast. Loss of rent coverage can also help if a tenant defaulted on their payments. Liability coverage protects you in the event a tenant is injured on your property and sues you.
Applying for Landlord Insurance in Australia
To apply for landlord insurance, start by researching insurance providers and comparing their policies and coverage options. When evaluating insurance policies, make sure to consider the amount of coverage you need, the deductible, and the premium. Once you have found a policy that fits your needs, you can apply online or through a local agent.
Tips for Betting the Best Policy
Here are a few tips to help you get the best landlord insurance policy for your rental property:
- Make sure the policy covers all your needs. Ensure that the policy covers everything you need, including liability, buildings and contents, and loss of rent.
- Check the exclusions. Make sure to carefully review the exclusions section of the policy to ensure that you understand what is not covered.
- Consider the deductible. A higher deductible may result in a lower premium, but it also means that you will be responsible for paying more out of pocket if you need to file a claim.
- Regular coverage review. As your rental property and circumstances change, make sure to review your coverage and adjust it as needed.
Landlord Insurance for Short-Term Rentals
Short-term rental apps like Airbnb and Stayz have gained considerable traction amongst vacationers in recent years as alternatives for hotel accommodations. However, this has also raised questions in the insurance front as not all insurers may cover short-term rentals in the landlord insurance policy. If you are gearing your rental property to serve that market, you should research this with every insurer you can find to determine which insurers offer coverage for short-term rentals.
Finance apps like 2 Ezi can be essential items to help you manage all your insurance premiums. The app’s budget management system will keep track of recent payments according to the schedule outlined in your policy, along with your rental income and expenses. The latter two will be critical in, say, the current renter has opted to part amicably with you and move out, while you are to evaluate the status of the property for any repairs before you could rent it out again.
Managing your Property
As a landlord, it is essential to protect your rental property with the right insurance coverage. By considering the need for coverage, researching policies, and applying for the right policy, you can have peace of mind knowing that your investment is protected. With the right landlord insurance policy in place, you can feel confident that you will be prepared for any eventualities that may arise with your rental property.
DISCLAIMER: This article is for informational purposes only and does not replace official property management advice. 2 Ezi has no relationships whatsoever with the companies mentioned in this article.
