Landlord InsuranceHow is your Coverage?
Whilst normal building Insurance policies will cover your property for damage sustained to the building, will yours cover you for the interior contents you own such as floor coverings, window furnishings and the appliances? And will your policy cover you for loss of rent, damage to tenants’ contents or for malicious or willful damage caused by tenants or their guests?
Whilst we are extremely stringent about completing reference checks on rental applicants and take some time interviewing people before recommending their application to our investors, situations can change over time and things can go wrong. If we turn on the news or current affairs programs we see the stories of workplace shutdowns, redundancies, the families under stress, parties gate crashed etc. Whilst these occurrences are more rare than the current affairs programes would have you believe, would your insurance policy cover you for the loss or rent or damage that may be done to your property?
Imagine, you have found the perfect tenants, a middle aged couple who currently work in senior positions at the local manufacturing company. Three months into their lease, your tenant phones to advise that the company they both work for has gone into receivership and will be closing their doors by the end of the week. Due to both tenants being out of work, they can no longer afford this luxury rental property and will have to break their lease. You notify the Landlord and start advertising the property immediately. Due to the property being an executive home you struggle to find someone suitable quickly. The property is vacant for 9 weeks before you finally secure another tenant. The previous tenants bond has been used to cover some of the rent loss, however due to the time lapsed since the tenants stopped paying rent, you are now out of pocket for 5 weeks rent. What do you do… In the event that a tenant breaks their lease, the Terri Scheer Landlord Preferred Policy can consider loss of rent either up to the re-let date, policy limit or end of lease (up to a maximum of 6 weeks). In this instance the Landlord would be able to claim up to the re-let date and could claim the 5 weeks rent above the bond. Sometimes, no matter how hard you try to find the perfect tenants, circumstances can change. It?EUR?s nice to know that if
circumstances do change, the landlord has insurance cover.
For properties in NSW, if the landlord has chosen to include a “break leasefee” in their lease, the only impact in the event of a claim is that the fee needs to be applied to any loss of rent first. The policy will only ever provide cover for what the tenant is legally responsible for.
Whilst policies vary greatly with the coverage offered, comprehensive Landlord Insurance can cost as little as a few hundred dollars per year, often less than two weeks rent.
Specialised Landlord Insurance Policies can cover
• Accidental Damage Caused by Tenants
• Tenant Theft
• Malicious Damage Caused by Tenants
and can protect Landlords from loss of rent due to:
• Absconding Tenants
• Untenantable Property
• Prevention of Access
• Tenant Hardship
Can you really afford not to be covered?