Important COVID Update
Read Here

What is landlord insurance, and do you need it?

By Kate Major

As a landlord, it’s important to protect your asset (your rental property) and the income they provide you (rent payments). A fit-for-purpose insurance policy is a must-have for all landlords and property investors.

In this month’s blog we’re going to look at what landlord insurance is, what it covers, and how it differs from regular home and contents insurance policies.

What is ‘landlord insurance’?

A landlord insurance policy is designed to ensure that you the landlord, your property and the tenants living in your property are kept safe. A good policy will provide comprehensive cover for common issues facing landlords like damage from tenants and any guests they may be entertaining.

This type of policy is built-for-purpose and is tailored to cover many of the specific situations that arise when a home is occupied by tenants.

Are all landlord insurance policies the same?

As with any insurance policy, the landlord insurance policy you take out may be different from that of the landlord down the road. It all depends on the value of your own contents inside the house, the insurance provider you choose, the value of the home and the land it sits on, etc, etc…

These are all things you’ll need to consider when researching which insurance company to use, and the scope and amount of cover you require.

What does landlord insurance cover?

Starting with the most unexpected events, liability is often included in a landlord insurance policy. Say accidental damage to a neighbouring property or third party was caused in relation to your rental property — perhaps a fire or a falling tree — the liability clause in your policy should cover any damages.

Similar to a general home insurance policy, landlord insurance can cover your owns contents inside your rental property. This could be anything you’ve furnished the property with (i.e., oven, dishwasher, fridge, lounge suite, etc.).

What sets landlord insurance apart from typical house insurance is that all good policies of this nature should cover you for loss of rent (through an eviction or the tenants leaving unexpectedly), damage to the property, and intentional or unintentional damage to the property caused by tenants.

What doesn’t landlord insurance cover?

We can’t stress enough the importance of doing your own research and due diligence in terms of what your landlord insurance can and can’t cover you for. Not all policies are created equal and the devil can sometimes be in the detail.

A common area that catches landlords out with their insurance is the conditions around loss of rent cover. Some providers won’t cover loss of rent in certain situations. A recent instance we experienced saw a landlord caught unawares that their policy didn’t cover them in the tragic situation in which the tenant passed away and the rent went unpaid with the deceased’s belongings still inside the property.

Landlord insurance doesn’t cover tenants’ personal possessions, so we strongly suggest landlords encourage their tenants to take out their own contents insurance policies. The tenants’ content policy can in some cases also cover their own liability should they damage the property. This needs to be confirmed by the tenant however and shouldn’t been seen as a replacement for the liability cover included in a landlord insurance policy.

How can your property management company help with landlord insurance?

Our property managers here at McPherson Property Management are well versed in landlord insurance and can help advise you about getting the right cover for your personal situation.

There can be a lot of resources to gather when applying for landlord insurance and a lot of requirements that need to be met in order for the policy to stay valid. These can include written references from tenants, performing and recording regular inspections and monitoring of consistent rent payments.

Many of these (and more) tasks are already potentially being carried out by your property manager. If you don’t have a property manager or you’d like some help with getting a landlord insurance policy, drop us a line… we’d love the chance to help you protect your asset.

Image: ‘Insurance’ by GotCredit via CC BY 2.0.

Up to Date

Latest News

  • Is paying property management fees worth it?

    Deciding if you need a professional property manager is a tough call for investment property owners, and the answer will likely change from one landlord to the next. Here are some key points you’ll want to weigh up when considering property management services. Do you have the time … Read more

    Read Full Post

  • How to avoid rent arrears with trustworthy property management

    Private landlords often struggle with avoiding rent arrears in the first instance and then knowing how to deal with them once they are owing. Let’s look at how top calibre Christchurch property management agencies approach the sticky topic of rent arrears. How property managers help avoid rent arrears … Read more

    Read Full Post