Our Sites:
What landlord insurance covers
All landlords hope to find tenants that are fair, amiable and, most importantly, respectful of their property. Good tenants will pay rent on time, keep the place clean and hopefully cause minimal (or no) damage to the house or apartment. Sadly, such occupants aren’t a guarantee and, whether a first time buyer with an investment property or a seasoned landlord, comprehensive cover is a recommended precaution. Specific landlord insurance, in addition to reimbursing for malicious, intentional damage, can cover items stolen by tenants (or their guests) and legal costs (arising from situations where tenants are injured or property is damaged) - sometimes up to $5000, such as with the NRMA, for example.
Landlords should also seek cover for loss of rental income, sometimes occurring when malicious damage and subsequent repair forces a property to remain empty and without paying tenants. In other situations, income may simply be lost from absconding tenants or a tenant’s failure to pay. Rental income could also be lost when a tenant is awarded release from their lease obligations by a court or, more seriously but equally realistically, through the death of a tenant.
Intentional damage and accidental damage
It’s wise to ensure that intentional damage covers your property thoroughly, not only for holes in walls and broken doors but also for potentially large-scale devastation, such as arson. Landlord insurance policies may also indemnify against accidental damage, which includes not only non-malicious breakages but also damage caused by children. General wear and tear will almost always not be included (as with most home insurance policies).
Some policies, such as that of ANZ, will even cover accidental damage caused by the landlord (particularly handy for unfortunate window breakages or other costly mishaps occurring during renovation or fixes). Landlord insurance plans may indemnify for storm damage also, with NRMA, for example, offering up to 12 months coverage in such an instance, should a property need repairs and be unsuitable for tenancy.
Cost of landlord insurance: examples
A quote obtained from ANZ for a policy on a new brick and tile house in Carlisle (Perth, Western Australia) at $200,000 value, with various features such as liability insurance, deadlocks on all windows, no swimming pool and contents over $50000, provided a rate of $64 per month. A fibro home in Darwin, between 20 to 25 years old and valued at $80000, with no deadlocks, came in at $56 per month. No doubt, local factors such as weather and crime figures may impact on the rate so it’s best to check with insurance providers before making a decision. Most insurance companies will consider you to be covered from the moment a policy is undertaken, and you can usually pay in monthly instalments. ING offers a refund on their policy if notification is made within 21 days and if a claim has not been made.
There are some restrictions, as you may expect. Landlord insurance may not cover damage by rodents, trees or tenants’ pets, as ING’s disclosure statement notes. The Australian Pensioners Insurance Agency (APIA) won’t cover online applications that feature a holiday home, two homes (or more) on common ground or that require coverage for accidental damage, loss of contents or building damage. One further word of caution: check the excess charge on any policy. If you do not foresee large-scale damage in the near future, an expensive policy with inflated excess fees can significantly add to an investment property’s running costs. Obviously, it’s wise to screen tenants and try to suss out the likelihood of damage before it occurs also, but with renting property to strangers being such an uncertain path, safeguarding your investment can be a small haven of reassurance.
