Lardlord Insurance – Do I need it? Which policy is right for me?

Like many things in life an investment property doesn’t come without it’s risks. And one thing I always ask my clients is “Can you afford to pay your bills and live your lifestyle if your tenant doesn’t pay their rent?”. Although it’s a harsh reality , financially you may be relying on somebody else , your tenant.

A thorough property manager will go to all lengths to ensure that a good quality tenant is placed in your property. Checking an application in modern days goes beyond just calling some references and a letter from previous Property Managers, your agent should be conducting checks on ID, employment, past rental history and checking the tenant is not listed on a national database for rental arrears. In our office we check on two databases TICA & TRA to ensure that if there has been any bad history on a tenant, we will know about it.

So, if you have a throroughly checked tenant in your property and a diligent property manager, what’s the problem? You must always remember that we are dealing with people and circumstances always change. Job losses, relationship break downs, children and sickness. All the things that can affect you and your life can also affect tenants. And when the circumstances of your “fantastic tenant” change, you need to be ready for what may come.

Landlord insurance is not something I recommend, I insist. You would not drive your luxury car without comprehensive insurance, so why allow an investment property, that could be your most valuable asset , that you may rely on the income for go uninsured.

Landlord Insurance will cover your for loss of rent, malicious damage, rent default, public liability and landlord legal expenses.

Be careful when hunting for your insurer though, as with all insurance cheapest isn’t always best and not all policies cover the same thing. Your agent will have a recommendation of a good policy for you and your property.

Some things to look out for when searching for suitable landlord insurance:

1) Does the tenant have to be under a fixed term lease? Often, a tenant will stay on a continuation lease, rather than signing a new fixed term agreement, make sure you are always covered

2) Does the policy charge an excess per claim, per room? Some insurance companies know how to sting you, How many excesses will you have to pay per claim?

3) What malicious damage do they cover, and what evidence is required?

Remember, your property manager is your friend, use their knowledge and experience to find a suitable policy for you and always read the PDS to ensure your claims will be covered in all the circumstances possible to you.

Matt Wigger

Property Manager

McDonald Partners Real Estate