What Does Landlords Insurance Cover? 

6th of June, 2018

The great thing about being a “LAND-lord” is that, well you own the LAND! And land has some very special properties (pardon the pun)  like the fact that it is indestructible!

However, the same can NOT be said for the building that sits upon the land and its typically the rental income from this building that helps “LAND-lords” cash flow the holding of such assets.

But unlike the indestructible nature of land, its not always plain sailing for us Land Lords – a leaking tap, fire damage or a burst water pipe can cause terrible damage to your property. It can also leave you out of pocket or without a tenant and therefore without rent, leading to unexpected holes in your budget. Protection for your investment property is a critical component of your investment strategy and the correct insurance can help.

What is Landlord Insurance?

Landlord insurance is insurance for landlord’s covering tenant-related risks including loss of rental income and loss or damage by tenants to a building and / or its contents.

Why is Landlord Insurance important?

Standard home insurances do not cover events related to tenants and tenancies and often a tenant bond is not sufficient to cover the costs associated with damages caused by an event not covered under a standard house insurance policy.

How does Landlord insurance differ from normal home insurance?

In general, landlord’s insurance protects your investment property building and contents from loss or damage from extreme weather events as most standard insurance policies do. Landlord’s insurance also offers additional protection unique to landlords, such as loss of rent when your tenant can’t live in the home due to extensive damage caused by a claimable event.

A Landlord insurance policy allows you to take out cover for loss and damage associated with your tenants. These losses cannot be covered under standard residential home insurance.

Landlord insurance provides cover for your building and/or contents items, for example: carpet and furniture provided for use for your tenants. It also provides the following optional covers for added protection:

For loss of rental income 

Landlord insurance typically provides cover for loss of rental income as a result of scenarios such as:

  • Absconding tenant

  • Defaulting tenant

  • Failure to give vacant possession

  • Death of a tenant

  • Hardship

  • Untenantable property

  • Prevention of access

  • Failure to vacate a holiday let property

  • Rent reduction

For Contents Cover 

Landlord insurance may provide cover for furnishings like curtains, carpets, blinds and light fittings.

The cover provided generally includes:

  • Tenant Damage

  • Flood

  • Storm or rainwater

  • Escape of liquid

  • Fire or explosion

  • Break-in vandalism or theft

  • Pet damage

  • Scorching

  • Impact

  • Earthquake

  • Glass breakage

  • Lightning

  • Oil leakage from any heater

  • Electric motor burnout

  • Riot or civil commotion

For Buildings 

Landlord insurance can provide cover for your building against loss or damage caused by tenants, their family or their invited guests.

The cover provided generally includes:

  • Tenant Damage

  • Break-in vandalism or theft

  • Pet damage

  • Scorching

Landlord insurance has additional benefits available outside Loss of rental income, contents and building cover.

These additions include:

  • Legal expenses and representation costs to specific limits

  • Bailiff or Sheriff fees

  • Lock replacements

  • Re-letting expenses in excess of the bond

  • Removal of goods

  • Tax audit costs and legal liability cover

  • Emergency Service damage

In many cases there are two types of Landlord insurance. One for landlords who use a property manager to manage their property and one for those who manage their investment property themselves.

Being a land lord and riding the real-estate cycle can be financially very rewarding. However, like all investments, this reward does not come without a few risks. Our job at Examine Property is to help you understand and mitigate many of these risks. We’d love to talk to you about the enormous opportunity that investing in property offers and how we can help.

Please Note

All information above is general information and has been prepared without taking into account anyone’s objectives, financial situation or insurance needs or requirements. When purchasing landlord insurance please base any decisions on appropriate advice and information contained in the relevant Product Disclosure Statement for the insurance product being considered.

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