Demo

Kathy Forrester

Account Executive

For some of us, apart from our home, investment properties are one of the biggest assets we will own during our lifetime.

 

As we reach the later years in our lives, these investments could well be our main source of income, so it is imperative that the insurance we choose meets our needs.

 

Landlord Domestic Insurance

There are two types of Landlord insurance policies available –

 

A “Defined Events” contract of insurance where a list of events are covered such as fire, water damage and malicious damage or a much broader coverage under an “Accidental Damage” contract.

 

A landlord insurance policy is slightly different from your normal house and contents insurance policy. Whilst the basic coverage may be the same, a landlord policy extends to cover loss or damage caused by the tenant or their visitors to the landlord’s building, fixtures, fittings or contents.

 

However, not all damage caused by tenants is covered. Damage that is deemed deliberate, intentional or malicious is covered. Damage that is due to tenant neglect, carelessness, poor housekeeping or unhygienic living habits is not. Damage caused by the tenant’s pets is also not covered.

 

Landlord policies will extend to include “Loss of Rent Cover”. If the building suffers an insured loss or damage and becomes uninhabitable as a result, the insurer will cover the loss of rent as stated in your rental agreement for a maximum period of 12 months or once the property becomes habitable, whichever occurs first.

 

A “Rent Default and Theft by Tenant” option is also offered by some insurers. This option allows you to protect yourself in the event a tenant leaves your rental property before the end of the tenancy period of the rental agreement without giving notice, or the tenant is legally evicted from your rental property.

 

Most insurers will offer the rent default option for either a maximum set dollar limit (e.g. $5,000) or a maximum period (e.g. for 12- 15 weeks).

 

Liability cover for the landlord is automatically provided by all landlord domestic insurance policies.

 

What happens if you have an apartment or a unit?

In almost all situations the building will generally be insured by the body corporate and so will the liability for common areas.

 

If you are a landlord you should insure any contents or fixtures and fittings you have inside your apartment and your liability as a landlord.

 

You will need to ascertain with the body corporate whether loss of rent is covered and if it is adequate for the complex or whether you need to insure your apartment or unit.

What can go wrong?

A real estate agent checking why a tenant was not answering any calls arrived at an insured property to find the premise vacant after 5 months into a 12 month rental agreement, with severe internal damage to wall structures, fixtures and fittings. A search was conducted to locate the tenant who had vanished leaving $31,430 in damages. The insurer paid for damages and the premise was relet 4 months later. The tenant had Rent Default cover and received 12 weeks rent.

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