Why do I need landlord insurance?

Property Insurance

This is a question we frequently get asked. You’ve got a property management company, you’ve got building insurance, so why do you need landlord insurance too? Well there are a few things beyond everyone’s control and it is always wise to consider having insurance to cover you for the unexpected.

Here are some reasons why you should consider landlord insurance:

Damage to property

No matter how great your tenants are, damage to property by tenants does happen. In our experience, because we find good tenants the majority of cases we deal with are accidental rather than malicious or deliberate. For instance, common claims for accidental damage include cleaning a red wine stain off a carpet or repairing a wall or broken a window.

Loss of rental income

Unexpected financial hardship can happen to the best of us. Tenants may suddenly lose their job, be diagnosed with an illness meaning they can’t work, or worst case scenario, die! While there is a bond to fall back on in some cases, uninsured landlords who suddenly find themselves without a tenant may find themselves having to pay a mortgage for an empty property.

Legal costs

You do have a duty of care to your tenant. If for whatever reason your tenant is injured as a result of your property, many insurances have a ‘liability to others’ clause. This means if your tenant takes legal action against you for whatever reason, your insurance company with contribute up to a certain amount to the costs.

Tax deductible

Landlord insurance is often a tax deductible expense. Have a chat to your accountant or financial advisor who will advise accordingly.

The extras you don’t think about

Some insurances will also cover extras, such as changing the locks after a rental loss, additional expenses associated with re-letting after a claim on rental loss, and rent loss incurred due to insured events. Some will even pay for professional tax audit fees.

Always read the small print of your insurance policy to see what you’re covered for and what you’re not, and get a few quotes from different companies. There are also websites that enable you to compare policies so you can make an informative decision when considering buying landlord insurance.

There is a lot to be said for peace of mind, and doing your research and taking out a comprehensive landlord insurance will give you this.

We’re always looking at ways in which to help you get the best out of your property investment and help you realise your property investment dreams.

If you are looking for a property management agent, would like to know more about insurance or even just want to know how property management and investment works for future reference, our knowledgeable and experienced team would love to help. With over 40 years of business in the area, we are one of Newcastle’s longest established property management offices, so give us a call on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat.

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