If you’re a landlord, you might be thinking your normal home insurance policy is enough to cover you but you’ll definitely want to take out specific landlord insurance. And here’s why…
Landlord insurance provides the same protections as homeowners insurance, plus additional coverage for risks specific to landlords – such as protection against loss of rent and property damage caused by renters.
Typical coverage includes:
Loss of rent due to renter default
Theft or burglary by renters (or guests)
Vandalism or damage caused by renters
Expenses associated with evicting a renter
Insurance gives you peace of mind to avoid financial and emotional stress. It protects your assets from theft or damage. As mentioned, it can also cover loss of rental income and protection from liability for injuries in your property, plus other benefits. That can’t be understated.
While some risks may seem unlikely, the costs to repair or rebuild your property and replace furnishings can be expensive, let alone loss of rental income or costs if you have to relocate your renters during repairs. That’s where landlord insurance can help to cover that financial risk and give you peace of mind.
It’s also important to buy insurance before renters move in, otherwise if the worst happens, you may not be covered for any losses during their tenancy.
Is home and contents insurance worth it? Here’s a story from another agency to put the value of insurance in perspective:
“A hailstorm hit my property and, while I thought it would be fine, it turns out the damage was significant. The roof needed replacing and there was significant water damage to internal walls, ceilings and fixtures. The claims and repair process was extensive, and I had to re-house my renters when asbestos was found during the repairs. Thankfully, my insurer really helped, covering the full replacement costs and repair bills and guiding me through the entire process.”
Frequently Asked Questions
Do(es) your home and contents policy cover rentals?
Ask your insurer: will your current policy cover renters within the property? It may not even cover losses caused by renters if it’s a standard home and contents policy and not specialist insurance. This is because leasing is considered a commercial income stream and is not covered under personal, residential homeowner’s insurance.
Do you have enough landlord insurance?
Getting the right amount of coverage for the situations you may need is important. Knowing what’s covered and not covered is equally relevant – the PDS and your insurance company will have the full details.
If you’re underinsured (or not insured at all), you will have to dig deeper into your pocket rather than rely on the insurer to pay the replacement or rebuilding costs. You can avoid the common pitfalls of being underinsured or not insured when renting your property either short-term or long-term by reviewing your cover annually, particularly if you have renovated or your circumstances have changed.
Is landlord insurance necessary for protecting rental property investments?
While not legally mandated, securing landlord insurance is highly recommended to safeguard your rental property investments. It provides essential protection against financial loss, property damage, and legal liabilities, ensuring peace of mind for property owners.
What benefits does landlord insurance typically offer?
Landlord insurance benefits generally cover property damage, loss of income if the rental becomes uninhabitable, liability for injuries on the property, and optional coverages like flood or natural disaster insurance
Are landlord insurance premiums more expensive than homeowners insurance?
Yes, landlord insurance premiums are usually 15% to 30% more expensive than homeowners insurance due to the additional risks of renting out properties. However, the exact difference in cost can vary based on several factors specific to your property and insurance needs.
Does landlord insurance cover the renters belongings?
No, landlord insurance does not cover the renters personal property. Renters need their own contents insurance for personal property coverage.
Can I claim it as an expense?
The costs of landlord insurance can range depending on the specifics of your property and sometimes this can be expensive, but the good news is that typically, landlords are able to deduct their insurance premium from their taxes.
A Cost You Won’t Regret.
Even the most diligent landlord can fall victim to unexpected events that cause property damage.
You might have the best renters in the world, but they can cause damage to a property or fail to pay the rent. Circumstances change and, even if you’re staying on top of regular maintenance and repairs, it won’t always stop things from going wrong. Illness or injury may cost a renter their job, then rent is unable to be paid. Owners may be able to get an order for the renter to vacate the property but the right insurance may cover lost rental income.
A landlord insurance policy can help you cover expenses related to these events. Ensuring you’re covered means a bit of peace of mind to know that you’ve got something to fall back on if something does go wrong and you’re not left hundreds (or thousands) of dollars out of pocket.
The verdict – it’s definitely a cost you won’t regret!