Why Do Landlords Need Rental Property Insurance?

As with all investments, owning a rental property is never going to be a risk-free activity. If you were to google “tenant from hell” you would find an endless supply of horror stories from tenants who just don’t pay the rent, to the full-scale trashing of properties, there are more than enough to disturb any landlord’s sleep. For every risk, there is an insurance and when it comes to investment properties, there are no ways around it – insurance is absolutely essential. Having a comprehensive insurance policy in place can help protect you against financial loss brought about by damage to your property or loss of income from unpaid rent. This article will go into a few of the reasons why rental property insurance is so essential.

Protecting your Property Against Damage

Unfortunately, things do go wrong from time to time, accidents happen and a recent spate of natural disasters in Australia has seen many properties severely damaged by fire or flood. Damage can also arise from a range of events such as storms, burst pipes, theft, impact, fusion and more. Tenants are immediately and automatically released from their obligations if the property becomes uninhabitable. On top of costly repair bills, the resultant loss of rental income can quickly become a financial issue for the landlord. A comprehensive landlord insurance policy will include all these covers so you can have peace of mind.

When Good Tenants Go Bad?

Even the best of tenants can have their circumstances change suddenly, job loss, illness, a death in the family, and marital breakdowns can all contribute to a tenant defaulting on their rent payments. Problems with tenants don’t always just stop at unpaid rent. Angry tenants have been known to cause a lot of damage to property, leaving behind smashed windows, holes punched in doors and walls and worse. Landlord insurance or rental property insurance can cover you for a range of circumstances where the tenant fails to pay rent such as hardship orders, court evictions and absconding tenants and the best policies also provide protection for both Malicious and Deliberate damage caused by tenants.

Being Sued can be Expensive

In 2013, a tenant in Victoria received a $300,000 legal liability compensation payment after sustaining serious injuries as a result of the balustrade collapsing on the balcony of his rented property. This claim highlights how vital it is to have legal liability insurance in place from day one of renting out your property. This cover ensures you for death or bodily injury to other people or damage to other people’s property and pays for damages awarded to the claimant, the landlord’s legal fees in defending the claim and even the claimant’s legal costs if the landlord is at fault.

The levels of cover offered and any excess you need to pay if you make a claim can vary greatly between different Landlord insurance providers. It’s important that you read the policy wording and if you are unsure, seek clarification from your insurer on what you are covered for and more importantly, what you are not covered for. If you’re looking for a rental property insurance quote or you’re after a little more information on the subject, please feel free to contact SGUA today for an obligation-free chat.

Holiday Home Insurance – 5 Things You Should Know

A holiday home can be a solid investment if managed correctly. Having others stay in the house through the year and using it yourself when you need to means in many ways you get the best of both worlds. But like any investment, it isn’t without its risks. Renting out any property means you’re dealing with tenants, many of whom can be unpredictable. It’s also important to cover the building itself in case of damage.
Covering your interests is a must to ensure you’re looked after if things do indeed go pear-shaped. This article will go into a few of the considerations you need to make when looking at getting insurance for the holiday property.

1. Get The Right Advice

While it’s a good idea to have a general idea about the kind of insurance policy that is right for you, it’s worthwhile to have a professional go through your options with you. An insurance broker will be able to look at your circumstances, the value or your property and your tenant situation and recommend the ideal policy.

2. Insure Your Contents

A lot of standard home insurance packages won’t include contents insurance, but given that holiday homes will usually see a lot more people coming and going over the course of a year, it’s arguably more likely that you’ll come across a tenant that is negligent or is prone to causing damage. Contents insurance will usually cover you for the standard fire, flood and theft and includes furniture and household goods – however it’s important to go through the fine print and be sure exactly what it is your covered for. Some policies will include fittings, kitchen and bathroom furniture which is probably advisable. Also, but sure that accidental damage on the part of the tenant is covered.

3. Employer’s Liability May Be Necessary

If you have a larger holiday home that requires private gardeners and cleaners, it may be worth thinking about employer’s liability insurance, which can be worked into your policy. This will cover you for the legal costs that would be incurred in the unlikely case that one of your employees is injured on the job.

4. Think About Possible Loss Of Rental Income

Loss of rental income insurance will cover you in the event of the building being damaged (due to unforeseen circumstances) and not being able to be rented for a set time period. While regular building insurance, which will cover the costs of repairs, this insurance exists to compensate you for this loss of income that you would otherwise have got. Whether this is necessary for you will depend on the rental situation you have at your holiday house. If there are long periods in which it the house is empty and you aren’t greatly reliant on this income, it may not be highly necessary.

5. Don’t Misrepresent Your Situation

Keep in mind that you should be always be as upfront and straightforward with your insurance broker. Providing false information about contents or the nature of the building is simply not worth the risk given that if discovered, it can render the contract invalid. Remember that when circumstances change, you need to disclose all new information to your insurer.

There are many different holiday home insurance policies available; it’s all about finding that one that suits your needs. For more information, contact SGUA today and have a chat to someone that can guide you through the process.