Becoming a property investor can be rewarding and as a landlord you expect some sort of financial return on renting your property. As with any investment there is some degree of risk, which can take a variety of forms. A good way for landlords safeguard against potential loss is to take out Landlord Insurance.
Landlord insurance will protect landlords in the event of:
. accidental or malicious damage to property,
. rental loss issues that can arise from tenants defaulting or abandoning your property, and
. provide legal liability cover
In considering effective Landlord insurance it is advisable to seek cover with a property management specialist. This is the only way to protect you against the laws that govern rented properties being the Residential Tenancies Act 1997. There are certain rights that tenants have and it doesn’t matter how well your property is being managed there are instances where loss is unavoidable:
These are just some of the issues that property investors need to be aware of. The bond can only cover certain items and in some instances is not always awarded in full to the landlord. VCAT has to take into account the circumstances of both parties in handing down outcomes relating to tenancies. In the event your property suffers rent loss and damages, the landlord is most likely to be out of pocket in some way. If you cannot afford these risks, you must take out Landlord cover.
Insurance on the property is the landlord’s responsibility and it’s important to understand the level of cover you need. If your investment property is a house, you need a Building policy AND a Landlord policy. If your investment property is a unit (with an Owners corporation) you only need a Landlord policy as the Building insurance is more often than not covered through the Owners corporation management.
To assess the best value Landlord and Building cover you must consider the terms of insurance. The best value cover will deliver the longest period of cover for rent loss, provide high cover to contents items and include pet damage. Building cover should provide you with additional benefits that will support any repairs that need to occur at your property.
You must also consider the claims excess. Some insurers will offer good length of cover however the excesses applied will negate your ability to claim on smaller damages. All these items are crucial in lowering your financial risk.