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The importance of landlord insurance

John Stanley

Imagine you bought a brand new computer only to hand it over to the person waiting behind you in line at the electronics store to take home. Or you finally bought a brand new Mercedes but you know it’s going to be driven out of store by a complete stranger and used for their daily commute.

Investment properties are not like the other purchases we make. For the most part, everything else we own we personally look after and if something happens we are ourselves rightfully responsible. But the very nature of investment properties means it’s a different story.

This, in essence, is why landlord insurance is so valuable. It means that while you’re not involved with the day-to-day of your property, you still have protections against things going wrong.

 

What does landlord insurance protect you from?

It depends on the policy, but in general, landlord insurance protects you from the kind of things that can cause you to lose out on your investment return either immediately or down the track. Damages, injuries, missed rental payments, sudden changes in tenancy- these are all common to landlord insurance.

 

What should you look for in a policy?

It always pays to be thorough (or even a little paranoid) when it comes to your landlord insurance policy. It’s logical the more events and occurrences your policy covers you for, the better. There’s an aspect that’s far less obvious though: try and make sure your policy covers periodic leases (those that extend to the periods beyond the formal signed lease).

 

What are premiums based on?

Often the correct assumption is that premiums are based on the value of the property. There are some notable exceptions however, such as those operating on a State-based flat rate, but it depends on the policy. Sometimes the type of property will also be a contributing factor to premiums.

 

What about pets?

Pet ownership is becoming a bigger and more visible issue when it comes to renting- and rest assured there can be aspects of landlord insurance that cover this. A few states even have the option of a specialised ‘pet bond.’ For the most part though, this is still something to be worked out between landlord and tenant. Many tenants are going the distance to prove just how little disruption their furry friends will cause too. You might even see some pet behaviour resumes coming through (yes, really).

For plenty more, Carolyn Parrella from Terri Scheer, Australia’s leading landlord insurance specialist, joins Steve Price. Have a listen with the player above. 

 

John Stanley
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