Not all landlord insurance policies are created equal. In a sense, all insurance should not be cut from the same cloth to be cost-efficient. For it to address concerns of a property, it must be customized in accordance with the unique protection requirements. Many landlords, however, think that a standard home insurance policy is all they need to cover all risks involved to their rental property only to learn too late when an insurer deny their claims. This is where landlord insurance comes handy but the question is: what does landlord insurance cover?
Detailed Rental Property Protection
As a landlord, you may be confused as to why the need to have another insurance policy other than your investment property insurance. While a standard home insurance policy may offer foolproof protection to your investment in the event of the natural or man-made disaster, a landlord insurance policy covers a wider scope. It covers not just the usual perils and damages stated on a regular home insurance policy with the addition of the following:
tenant damage to property
loss of income
liability claims from accidents or injury within the premises
Landlord insurance policy offers a wider safety net intended precisely for the protection of individuals with rental investments. It could be a rental home, a multi-storied apartment or a commercial or industrial complex. While it is not legally required in Australia, every risk-averse real property investor must ensure that all their bases are covered. A standard policy may sound too good to be true but there are just some potential risks to landlords not covered on such insurance portfolio.
Landlord Insurance Policy Clauses to Remember
Undeniably, landlords face much greater perils than an ordinary homeowner, and a landlord insurance policy will help create a safety net as such. When thinking of comparing policies, however, the following important clauses on your coverage must be carefully taken into consideration.
Building and Contents Coverage.
The policy must protect a rental property owner against any financial costs related but not limited to structural property. It must also include contents not otherwise specified in standard home insurance policies like structural damage to fixed appliances, plumbing and gas systems, internal fixtures or fittings, cables/piping, carpets and loose floor covers, and exterior awnings and blinds.
Guaranteed Replacement Cost.
Take note of “guaranteed replacement cost” clause. These guarantees cover to replace or rebuild your property and not a flip from the usual cash valuation cover that adds depreciation to the mix.
Water or Flood Coverage.
This extra policy is often added to a landlord insurance base policy. Many property owners are under the impression of being covered in the event of floods, torrential downpours, sewer backups, and other water problems due to natural disasters, but they’re not. So, make sure to verify if this clause is in your policy on top of stipulated acts of nature like earthquakes, hurricanes, cyclones, tornadoes, and riots.
Loss of Income Protection.
Sometimes referred to as rental default coverage, this will help give you enough leeway to recover a rental amount in the event of a catastrophe or damage to property making it inhabitable. Do check if your policy covers eviction or delinquent tenant.
All insurance policies are stipulated to have this coverage. However, the gist of your own landlord insurance policy can be customized to meet your concerns. Doing so will protect from incurring out-of-pocket expenses.
So, what does landlord insurance cover? Aside from the base policy, it all boils down to what your insurance broker has in store for you. Be reminded that this specialty policy has coverage limitations which you can negotiate upon. If you happen to have multiple rental properties, acquiring an umbrella policy from the same insurance broker may also lessen your premium cost while ensuring foolproof protection mantle to your investment.
Want to protect your rental property investment? Request a landlord insurance quote online or schedule a consultation with Landlord Insurance HQ now! Call 1300 815 344 so we can fully assist you in crafting an insurance portfolio to suit your rental properties unique requirements.