With the housing market in a bubble, the rental market for Australia has also swelled as many families and individuals lean on renting rather than owning homes. This also signals a advantage to many individuals with investment properties on the sides. Now, you can finally rent-out a second home or a part of your vast property to earn passive income. While being a landlord may offer lucrative perks financially, it is also important to know that such carries various responsibilities that go beyond the scope of just maintaining your property and this calls for an appropriate investment property insurance to be included on your priority list.
You may be overwhelmed with the number of insurers and brokers out there when hunting for one. Add to that the baffling jargons and legal clauses on insurance policies. When comparing investment property insurance coverage for your rental property, try to find these 6 critical clauses on a policy quote:
1. Guaranteed Replacement Cost
Must be clearly written on your policy of choice. When insuring the building, it is imperative that you settle for “replacement” rather than cash valuation. Replacement cost clause offers protection from financial concerns due to structural damage to your investment property without considering depreciation. This clause will protect you from damages on fixed appliances, plumbing, gas and water systems, electricity and other cabling system, fixtures and fittings, carpets and other loose floor coverings, fixed exterior awnings as well as blinds, and many more. All in all, this guarantees “replacement” or “rebuild” of property regardless of the cost involved.
2. Personal property coverage
Must also be included in your investment property insurance if rental property comes fully or semi- furnished. This ensures that, as a landlord, contents like furniture, electrical appliances, light fixtures, carpets and curtains, artwork, and other knick-knacks are covered in the event of damage. This clause is often reserved for the landlord to decide upon and normally calls for an added premium to your policy.
3. Acts of nature
Is always included in most, if not all, insurance policies. It usually covers various natural disasters ranging from earthquakes to hurricanes, cyclones, storm and tornadoes. However, adequate review must be done to your own insurance policy. If your area is notorious for riots or seemingly bordering with terrorism threats, it is only fitting to include such concerns to your coverage.
4. Flood or destructive water coverage
Must also be included in your policy. While cyclones may have you covered, some insurers do not honour claims for damages caused by flooding. When water piping also breaks down, such damage may be covered but not water damage to property.
5. Rental Income Coverage
Is another must-have. Often referred as rental default or loss of income, this provides continued income for your investment property in the event of disaster and repairs or rebuilding is still underway preventing you from collecting rent or getting new tenants. If possible, go for an insurance policy that also offers rental income coverage for eviction or when facing irresponsible tenants.
6. Liability and medical coverage
Though part and parcel of insurance policies in Australia must also be scrutinized. Make sure that it does not only cover legal fees but also in paying settlements or judgments as well as hospitalization and medication for injury. Some policy may also cover funeral and subsequent legal fees in the event of death within the premises.
7. Vacancy coverage
Is another must-have for landlords. Though considered an “add-on” to a base policy, it allows protection to various aspects like vandalism or malicious mischief when a property is uninhabited.
Without a doubt, investment property insurance is a must-have for landlords. Not only will it offer protection to the property and its contents but also to your own financial welfare. In all these, it is imperative to find a reliable insurer or broker who can address all your unique needs.
Need help protecting an investment property? Landlord Insurance HQ offers flexible investment property insurance policies to address your unique requirements. Call us on 1300 815 344 for a consultation or request a quote online for your Landlord Insurance Quote.