Landlord insurance is one of those things we hate to pay yet are very grateful when it turns out we need to claim it!
A recent statistic from Canstar.com showed that over 60% of landlords will claim for their property whilst holding a policy.
What does Landlord Insurance typically cover?
Loss of rental income – when a tenant leaves without notice; vacates the property without finalising owed rent; if a tenant dies during the lease period or if the property is left in a damaged state and needs to be fixed before new renters move in.
Building and contents – cover for accidental loss or damage to property contents, malicious damage to the property and pet damage.
Additional expenses – in some circumstances insurance will cover legal expenses attached to the property where a tenant may need to be evicted and locks need to be changed.
According to leading landlord insurer Terri Sheer, the top most claimed cover items for landlord insurance are:
1. Loss of rental income
2. Malicious or accidental damage
3. Water damage
4. Death of a tenant
5. Storm damage
What’s the difference between Landlord insurance and the Bond?
A rental bond (or security deposit) is a payment tenants are required to pay when they sign to lease a property. It is held for the duration of the lease and it available to be used by the landlord at the end of the lease if there is damage to property or there is a breach of the lease agreement.
The bond amount is typically equal to four-weeks rent but is NOT considered withheld rent (it doesn’t cover the first or last month of the lease).
While a rental bond does give a landlord cover for small costs that may be incurred when a tenancy doesn’t go well, four week’s of rent is often used up quickly and so, having landlord’s insurance offers extra peace of mind. Furthermore, landlords insurance can be accessed whilst a tenant is still renting a property (in the case of flooding or accidental damage where a landlord is happy for a tenant to stay). A bond can only be accessed and used by the landlord after the tenancy agreement has ended and the necessary procedures for bond access have been tended to.
How much does Landlord Insurance Cost?
The cost of landlord insurance varies greatly depending on the property location and type and it’s current security. Excess costs offered by the insurance company will also significantly alter the cost of premiums.
All Property Management would be happy to assist you in providing some of our recommended insurance companies. It is important to ensure you have Landlord insurance before we start the process of managing your property, as insurance will only cover from the date the insurance is obtained.
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