Like home insurance, landlord insurance can cover your rental property and its contents against risks like storms, floods and fire. Will generally cover items like furniture and furnishings, carpets, curtains, domestic appliances but exclude and thus not cover personal effects, watches, computers, cameras, bicycles and other items of the occupier. It can also cover the damage that tenants can cause to your contents – and even loss of rental income from rent if you’re unable to rent it out during repairs, or if your tenants get evicted or break their lease.
2.6 million Australians own an investment property.
(CoreLogic, Profile of The Australian Residential Property Investor, 2016)
If damage means you can’t rent your property for a while, landlord insurance can cover you for loss of rent.
A landlord insurance policy can include cover for accidental damage, theft and malicious damage by tenants – as well as loss of rent if they leave without paying.
Accidental Loss or Damage caused by physical loss or damage including Defined Events which happens at the property address during the period of insurance not otherwise excluded.
Covers only the events nominated and listed by the Insurer in the policy wording (also known as Listed Events or Insured Events).
If damaged by a defined event then the cover for loss of rent for no more than 12 months from the time the damage occurred.
Include any legal costs incurred by the Insured to legally evict a tenant or to recover any amounts owed by the tenant. When Rent Default include Theft by Tenants, this benefit may also extend to include legal costs to recover amounts for the items stolen by a tenant and/or their visitors.
Most landlord policies include malicious damage caused by a burglar or vandals as standard under their buildings and contents cover. This generally excludes damage caused by tenants or other people lawfully on your premises.
Some Landlord insurance policies can also cover holiday rentals and long-term rentals. Will provide coverage to the Property Owner for normal perils, such as Fire and Storm, but also insure for damage from Airbnb guests that could be termed Malicious, Accidental or even Deliberate damage, Theft by your guest, and Loss of Income following damage. Due to the fluctuating income due to vacancy of an Airbnb premises, loss of income is determined by your average annualised income and how long your home is uninhabitable for. As an Owner Occupier who lives in the property, or is absent, you will also keep your own personal items at home or even away from home. You need to have an occupier Contents insurance policy that insures you for those items.
Each policy is different, but generally you won’t be covered:
Janet and Ross 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, Janet and Ross were unable to rent it out immediately. Fortunately, the couple had taken out landlord’s 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: All Residential Landlord insurance policies are subject to dollar limitations on certain types of items and will have exclusions such as damage from wear and tear. Differing policies have different coverage, different exclusion, conditions, and basis of settlement.
A product disclosure statement (PDS) is available from us. You should consider the PDS in deciding whether to acquire, or continue to hold, Residential Landlord insurance.
For professional advice on Business Insurance placement solutions, please contact All Star Brokers.
