Do you Need Landlord Insurance?
In the pursuit of preparing for the unexpected, it is well worth investigating if this extensive cover is right for you..
Landlord insurance acts as an extra layer of coverage against some of the income risks associated with owning a rental property. In the pursuit of preparing for the unexpected, it is well worth investigating if this extensive cover is right for you.
Landlord insurance policies can vary significantly between companies so it’s important to read the fine print to ensure you are protected for what you need – and not paying for extras that you don’t require. We recommend reviewing a potential policy together with your lease agreement to clearly understand what’s already covered by the bond and establish any gaps where insurance needs to step in.
Rental income protection is a major benefit of landlord insurance. For example, if an unexpected weather event renders a dwelling uninhabitable, a standard building policy will cover the cost of repairs while landlord insurance generally goes further and reimburses lost rent. This protection is especially useful for an investment property with ongoing mortgage repayments, which don’t stop, even if the rental income does.
“…it’s good to approach insurance with a mindset of seeking cover for situations that could significantly hamper your financial situation.”
Another factor to consider is if your investment property is located in a strata managed structure, as your building and legal liability for public areas should be insured through the strata plan. Your owners corporation can provide details on what the strata insurance policy covers so you can check there aren’t any double ups.
Insurance is the one of the few things in life that we purchase and hope to never use. That being the case, it’s good to approach insurance with a mindset of seeking cover for situations that could significantly hamper your financial situation. When selecting a policy, consider how outlaying the cost of an extensive landlord insurance policy impacts your rental property income, keeping in mind as it is an investment expense and should be tax deductible.
Our Marshall White Property Management Team can assist if you have any questions. For more information contact us on (03) 9822 8711