Author: sguainsurance

Why Do Landlords Need Rental Property Insurance?

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.

rental property, rental property insurance, landlords insurance, home insurance, legal notice

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.

What Your Rental Property Needs To Meet The Standard

What Your Rental Property Needs To Meet The Standard

If you own a property that you’re looking to rent out to tenants, there are a number of basic requirements that you need to consider. Obviously, having the property in reasonable condition is important and can help you fetch a higher income on the property. Some requirements have a legal component, meaning you have to ensure the property reaches a standard such that the tenant is safe and enjoys a certain standard of living.

Another consideration is the changes to the Real Estate Market. With tight competition in the rental business, it makes sense to have an edge over the rest. Take also into account, what is now classed as ‘the average’ living conditions compared to what they were 10-20 years ago.

Maintaining your investment property in good condition, providing desirable features and insuring against unexpected events are things you can do to ensure that your asset continues to grow in value. Below is a list of suggestions you may wish to consider:

Efficiency

 

There is a growing need on the part of homeowners to ensure their homes are as energy efficient as possible. In fact, there are strict requirements for new homes being built that they reach a certain standard of efficiency. Similarly, landlords’ responsibilities in these areas are becoming more robust and in the future, homes that have efficiency problems or fail to reach a certain threshold may not be able to be rented out.

Homes with solar panels and low voltage lighting are increasingly being viewed very favourably by prospective tenants.
It is the landlord’s responsibility to maintain the energy efficient structure of the house including the insulation. Wear and tear on the walls or roof can need to be dealt with and all installations and utilities including gas, water and electricity need to be functioning at a reasonable level.

Air Conditioning

With the hot summer days approaching that Australia is famous for, air conditioning is one thing that prospective Tenants will appreciate in their rental property. When considering such an investment, look not only for the quality of products but also the quality of installation and after sales care.

Storage

Most Tenants have rented before, and quite possibly experienced their share of moving around. When you move around, you tend to collect odd bits and pieces. Safe and secure storage, therefore, would be a valuable asset to your Tenants and something they might look for in their new rental. Storage could range from a garden shed, patio, storage shed, spacious garage, hooks for hanging in a garage, under-floor storage areas, as well as attics and ceiling storage.

Security

 

25474453_l

There are also basic security standards that need to be upheld at your property. These exist not only to ensure that the property is less likely to have intruders but to protect tenants as well from basic hazards.
The minimum requirements include, but are not limited to, the following:

  • Having a front door that can be deadlocked, and all other doors to be lockable
  • Windows that are lockable from the inside or have a fly-screen
  • For a residential house that is not part of a larger strata building, it is the landlord’s responsibility to ensure there is a light of some description near the main entry.
  • Balconies should only be able to be accessible from inside the premises
  • Smoke alarms should be fully functional and less than 10 years old

Modern Kitchen

The kitchen is often the hub of a home. Many Tenants would appreciate having a modern kitchen. So, the next time you think of updating the house, consider the kitchen. There are a lot of cost-effective solutions for updating the look and feel of a kitchen. Look at simple DIY projects to gain interesting ideas on what to do.

 

Clean and Sanitary Bathroom

A lot of Tenants are particular with their rental’s bathroom. A malfunctioning flush is not appealing to tenants. Neither is a toilet with broken tiles or a stained sink. If possible, give the bathroom a fresh coat of paint or for a quick facelift, consider updating some of your existing fittings such as new tapware, a mirrored storage cabinet or a new light fixture.

 

Landlord Insurance

 

39058430_l

Strictly speaking, having a comprehensive landlord insurance policy isn’t only a legal requirement, but it is highly recommended that you insure your investment for your own good.
There are two main things a good insurance policy is designed to cover; negligence on your part that leads to you being liable for compensation to your tenant, and the tenant not upholding their contractual obligations and you being out-of-pocket as a result.

Of course, it’s important to keep in mind that excessive negligence on your part can invalidate the insurance policy. If for example, you have misrepresented the property in the official documentation or failed to deliver on your legal responsibilities as a landlord, the insurance policy may not cover your should there be any problems in the future.

The requirements of a landlord can be quite complicated and it is wise to have a landlord protection insurance professional in your corner and looking out for your interests. For more information about rental property insurance, please contact SGUA today or refer to our website.

Holiday Home Insurance – 5 Things You Should Know

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

Right AdviceWhile 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

34479497 - money is flying away from sadness businessman, vector, eps10

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.

5 Reasons You May Be Refused Landlord Insurance

5 Reasons You May Be Refused Landlord Insurance

If you are renting a property out to tenants, whether it be a holiday home, an apartment or a long term house rental, it’s important that you take out an insurance policy to protect you against any misfortunate circumstances that may arise. These may include issues with the tenant, accidental damage caused involuntarily or maliciously, legal liability and a host of other situations that cover your investment and look after your interests.

Unfortunately, the nature of the business is such that insurance brokers cannot always provide cover, and there are cases in which you may be denied insurance given that you present too much a risk. There are various reasons an underwriter may choose to deny you insurance, let’s take a look at the most common among them.

1. There Is No Tenant

If the rental property is empty with no clear signs that a tenant will soon move in, insurance companies will be more reluctant to offer you an insurance policy – in fact, many will have this stipulated in the fine print. In denying an insurance claim, underwriters are essentially saying that the risk that you and your property represent is too great. For one thing, taking out an insurance policy without a tenant may be considered suspicious – given that it provides less of a benefit to the landlord. Also, complications may arise due to the fact certain insurance policies will cover circumstances in which the rental property is tenantless.

2. The Building Has Been Constructed In An Unconventional Way

Most landlord insurance policies will require the building is constructed ‘by the book’, so to speak. This usually means that it has conventional framing, with a tiled or slanted roof and brick/stone walls. Some policies won’t be offered on homes that have completely flat roofs, given that they are more likely to have problems with leaking and other issues.

3. Your Property Is A Sublet

Subletting situations can be a bit of a red flag for landlord insurance companies. If you are either the landlord of a group of flats that are being rented out by the tenants to others, or you are a tenant wanting to sublet your apartment, it’s going to be difficult to be approved for standard landlord insurance packages.

4. You Are Doing Renovations

If you’re having major renovation work doing on the house, flat or apartment, it’s unlikely you’ll receive a policy until after they are finished. This makes sense given that if the building is being radically changed, the terms that are agreed upon may no longer be relevant and may work against the underwriter. Small renovations are often acceptable, depending on the details of the specific package.

5. Your Tenant Arrangement Is Informal

Unsurprisingly, the necessary forms and paperwork need to be produced confirming the arrangement that you have in place with your tenant. You’re significantly less likely to be able to get a landlord insurance in which there is no formal agreement – which can be common when the agreement is between family members, close friends, etc. Luckily, in these cases there may be more trust between the parties and landlord insurance may not be as necessary.

6. Property Not Managed By A Professional Property Agent

Most landlord insurance policies require the appointment of a professional property agent to manage your rental property. When the tenant breaches the conditions of the rental agreement the landlord or his appointed agent needs to know their way around the various relevant sections of the legislation. Many of these pieces of legislation demand an immediate or timeous response and action. If you do not follow the regulations your cover will be affected as well as you not obtaining the right result.

We’ve discussed a few of the reasons you may be denied a landlord building insurance package – but as always it will depend on your specific situation and the company you’re dealing with. For more information on these matters, don’t hesitate to contact St George Underwriting Agency today.