Should I get landlord insurance?

landlord insurance

If you own property that you’re renting, then landlord insurance is a must. With the right policy, you’ll be protected from the costs of unexpected damage or rental arrears. The property experts at One Agency Orange have summarised the benefits and what to look for in a policy so you can find the best deal.

The benefit

You’ve bought this property to enjoy greater financial security, so why risk your income from it?

‘In those rare times where one of our landlords doesn’t have insurance and something goes wrong, they always wish they had invested in it from the start,’ said Simone Fogarty, Director and Senior Property Manager for One Agency Orange.

‘No one knows better than a property manager the number of ways you can end up with an unexpected cost for the very things that landlord insurance covers. Even the best of tenants can find themselves in a challenging life event and suddenly can’t pay their rent or have a friend over who causes some damage.’

A good property manager will discuss financial risks with you and how to manage them, along with allowed tax deductions for insurance policies. Landlord insurance is part of that conversation so by discussing this aspect of your finances, you’re building on your overall financial strategy and protecting your future income.

What does landlord insurance cover?

Landlord insurance protects against:

  • tenants and their guests’ malicious damage
  • tenants’ inability to pay rent
  • any legal expenses for evicting a tenant
  • natural disasters and similar worst-case scenarios such as floods, storms, and fire
  • public liability

‘Public liability is a feature that can easily get overlooked,’ says Simone. ‘It will cover you for claims of personal injury or damage to personal property that has occurred at your rental property.

‘It’s a rare occurrence but it does happen so it’s a smart move to protect yourself against this possibility which could run into many thousands of dollars.’

Other expenses can be included in one provider’s policy and not another’s so read all the fine print. One example is the cost of replacing property locks if a tenant doesn’t return their keys. Extras like this are worth looking for when you’re comparing policies.

Keep in mind that landlord insurance doesn’t cover rental loss due to not having a tenant, the property’s general wear and tear, and maintenance expenses. These are all potential costs you need to factor into your financial plan.

Landlord insurance vs building or strata insurance

Building insurance protects the physical building against destruction caused by an event such as a fire; it doesn’t cover its contents or grounds. An owners’ corporation insurance (also called specialist or body corporate insurance) only safeguards a strata building’s exterior.Neither of these insurances will cover you for the items that landlord insurance covers.

What does the bond cover?

A rental bond is usually only four week’s rent and covers any damage or non-payment of rent.

‘If you need to get a property back up to where it’s appealing to quality tenants, that can often include items such as replacing flooring, cleaning up the gardens, and repairing any damage,’ says Simone.

‘Those costs can quickly add up to more than the bond, especially if you have unpaid rent as well. You may even have to repaint or repair damage such as a broken window or door or replace furniture a pet has damaged. This is an event where your landlord insurance policy really pays off.’

Essential features of an insurance policy

The cost of landlord insurance differs according to states and suburbs so be sure to shop around for the best policy, while remembering that cheaper ones aren’t necessarily the best.

‘The hope for any insurance is that you’ll never need it. But if the time comes when you do, you want to make sure ahead of time that you have the right policy so do your homework and compare policies before signing up,’ advises Simone.

Ask the provider to list exactly what the policy covers including natural disasters, rental losses, tenant and pet damage, public liability, the legal details, and any extras they offer such as covering damage from pets and any discounts or special offers they have. If your rental property is furnished, it’s wise to add contents insurance too.

Renters need to note that the landlord’s insurance won’t cover their contents. They need to have their own insurance for their personal property.

If you have an experienced property manager, they will have already done the legwork for you and be able to recommend a reliable insurance provider who will give you a good deal. One agency Orange’s preferred insurer is Realty Protect Landlord Insurance. You can call us or drop into the office for a chat about why we prefer this company. We’re Orange’s friendliest and most energetic agency and are happy to answer your questions.

Our service is all about making your real estate experience as stress-free as possible.

02 6362 9560 | | Suite 7/230 Summer Street Orange NSW 2800