Landlord insurance ‘must haves’

We believe landlord insurance is an absolute must when it comes to your investment property and its worth doing your homework and checking what is and isn’t covered, the amount covered and what your excesses are.

Some insurance companies offer a combination of both home and landlord cover, but they may not provide adequate cover if a situation arises. While some strata corporations cover damage caused by the tenant to the building, others don’t. Strata insurance often doesn’t include contents damage either.

Here are some of the main points you should check when doing your homework:

Loss of rental income

No matter how good the credit checks are, or even how well you know your tenants, financial situations do change. Your tenant may lose their job or be unable to work due to an illness and this may lead them to default on their rent.

Rental income maybe lost for other reasons; you maybe renovating or it may be empty for a long period of time due to extensive damage after a storm or flood.

Malicious and accidental damage

Malicious damage, for example, holes kicked in doors and walls and smashed windows, is when the damage is made on purpose – out of spite, revenge or otherwise. And it might not be your tenant who does it – it could be an ex-partner or friend.

Accidental damage is exactly what it says it is sudden or unexpected damage, such as wine spilt on a carpet.

Regardless of the cause of damage, you need to be sure your insurance will cover the cost of repair bills and replacement as a standard building and contents insurance policy may not cover you for tenant related damage.

Water damage

This can happen for many reasons; it may be caused by the tenant for some reason, the washing machine or water tank may have sprung a leak or a pipe may have burst.

A tenant may inadvertently leave a tap on, and many standard building and contents policies exclude water damage due to accidents caused by the tenant. You will also need to check the actual building is covered for water damage as well has the contents; repairing structural damage due to water can be pricey.

Standard building and contents may also exclude storm and flood damage completely, so check the small print and decide whether you want to pay an excess to include there are other optional upgrades available is available.

Legal expenses

Evicting a tenant can sometimes get messy, with the tenant fighting it and taking the battle to court if they believe the eviction is unfair. Court costs can be expensive.

If a tenant has an accident and deems the accident is a result of an unsafe property, once again, the landlord can find themselves in court.

When you’re choosing an insurance company, it always pays to read the small print when you’re comparing policies so you know exactly what you’re covered for, and what you’re not. The biggest get out clause we come across is that they will only recognise tenants when on a fixed term lease and not on their continuing lease period after such time.

Probably better to pay a more for your insurance and know you’re completely covered in the event of an unfortunate, costly situation than finding yourself not covered at all.

The plus is, landlord insurance is often a tax-deductible expense, so it’s a win win situation!

While we cannot recommend an insurance company, we can advise on which companies we see landlords get the best result when they do have to make a claim.

There are other points we would recommend you consider including in your insurance, such as death of a tenant (we kid you not, it does unfortunately happen), so get in touch if you want to know more – come on in to our Cardiff office or give us a call on 02 4956 9777 and our experienced team can help.

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