A cost landlords can’t afford to cut
It’s not just the rising interest rates affecting landlords; the knock on from cost of living is also having an impact on the cost for routine maintenance, and other costs such as council rates and, where the landlord pays them, utilities and strata costs.
It’s always wise to review finances and look at where savings can be made, but we believe one cost you shouldn’t cut, is your landlord insurance.
While you may want to consider some the risks involved, and possibly increase the excess you may have to pay to reduce the cost of landlord insurance, we believe you shouldn’t cancel your insurance completely.
Here are some common questions asked and comments we hear landlord’s insurance:
Why have insurance?
For starters, some lenders may stipulate you have to have landlord insurance in order to have the loan.
We know many landlords who have never had to make a claim, but we also know landlords who have had to make claims when the unexpected happened – varying from claiming a substantial amount for repairs for storm damage to a tenant unexpectedly dying.
Insurance offers peace of mind that if the unexpected happens, you won’t have to suffer financially for it.
Furthermore, it’s a tax-deductible expense too.
It probably won’t happen to me
This is probably the most common reason landlords think they don’t need insurance. But landlord insurance is like car, or any other insurance; you probably won’t need it, but there is always a chance you will.
If you do need it, it could be an expensive outcome; public liability claims can stretch into millions.
You really don’t know what is round the next corner; accidents do happen regardless of how well the property is maintained, we do get some pretty wild storms from time to time, and even good tenants default on their rent.
Doesn’t the tenant’s bond cover it?
Yes, you do have the tenant’s bond, but the bond usually only covers four weeks’ rent; that means you’ve just got four weeks to sort out any legalities connected to the tenant doing a runner, and sorting out clearing the property and preparing it for rental, and advertising for a new tenant.
A bond isn’t insurance. It doesn’t pay out if there is any accidental or water damage, and there’s no public liability if you’re deemed at fault if a tenant injures themselves.
What does landlord insurance cover?
Landlord insurance covers a wide range of scenarios, and there are add-ons, and different levels of excess. As a bare minimum, you should be looking at cover for:
- loss of rent
- accidental, intentional and malicious damage
- theft and attempted theft
- house fire
- water damage
- fixed glass breakage
- impact
- public liability.
With the above in mind, can you afford not to have insurance?
Take a look at our blog post, What to look for in landlord insurance, if you need some guidance on what to consider.
We also advise you use a specialist landlord insurance provider; non-specialist providers may not cover you to the extent you need.
While we cannot recommend an insurance company, we can certainly share with you which companies we see landlords get the best result with when they do have issues. And do your own research. Look at reviews and before buying read the PDS and consider whether it is right for you.
Our team is always keen to share its knowledge and help you on your property investment journey and ensure get the best out of your property. We’re always here for an informal chat to answer questions, so give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office.
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