9 things landlord insurance won’t cover
We take out insurance to give us peace of mind so we are covered should the unexpected happen, however, there are some things which landlord insurance won’t cover.
Insurance companies do need to strike a balance between providing cover for the most common landlord risks while keeping their own risk manageable and policy costs affordable; if they covered for every eventuality and risk, then insurance would quite simply be unaffordable.
Generally, the main things landlord insurance covers, (to a greater or lesser degree) includes:
- Tenant damage
- Building
- Loss of rent
- Legal liability
- Costs associated with taking legal action against a tenant
- Landlord contents
Here are 10 things which are not generally covered by landlord insurance:
- Wear and tear
Wear and tear of an item is considered a natural process of the lifecycle of an item, and it is a cost landlords will have to budget for.
For instance, worn carpets, faded curtains, dirty, broken grout lines or loose tiles will need replacing.
- Mould and mildew
Generally, insurers consider mould and mildew as avoidable, and it usually won’t cause damage if it is dealt with quickly.
Depending on who is deemed responsible for the outbreak (eg is the poor ventilation in the room due to the building or negligence on the tenant’s part), the costs will usually fall on either you, as the landlord, or your tenant.
- Building defects
Insurance companies assume that the building was properly built and adhered to building regulations; like most other building insurance policies, landlord insurance policies don’t include building defects.
- Pests and vermin
Like mould and mildew, insurers generally see pests like rodents or termites as a preventable and/or a gradual problem that’s related to the general upkeep and maintenance of the property.
Landlord insurance, like most building policies, doesn’t cover damage caused by rodents, vermin or insects, or the cost of pest removal
- Imminent events
Landlord insurers will often impose an embargo on cover if damage known to be extremely likely or already having an impact. For example, if the property is in a known bushfire area, or an area likely to flood.
- Retrospective events
You cannot purchase landlord insurance and expect it to cover for an event that has already happened, for example damage caused by a recent storm, or loss of rent if the tenant is already in arrears at the time the policy is issued.
- Tenant contents
Landlord insurance is exactly as the name suggests – it’s to cover the contents the property owned by the landlord; the tenant will need to take out their own policy for their own belongings for damage and loss to their own property (for instance in the event of fire or theft).
The only situation landlord insurance will cover tenant’s property is if the damage is due to the landlord’s negligence.
- Landlord/tenant repairs
Repairs and maintenance on an investment property must be carried out by a qualified, registered or licenced professional tradesperson; insurers will not cover for any work carried out by unskilled or unqualified people.
- Market conditions
General investment risks, such as capital losses, or a decline in property value, will not be covered by landlord insurance. Likewise, if there is a delay in finding a tenant, unless the reason your property is without a tenant due to a specified event, (eg you’ve had to evict the tenant for genuine reasons), then the loss of rent between tenancies will not be covered.
Always check the insurers PDS, and any excesses you may have to pay so you know what is covered in each policy, and what costs you may incur in the event of making a claim; if you are unsure about anything in the policy, ask the provider for clarification.
While we cannot recommend an insurance company, we can advise on which companies we see landlords get the best result from when they do have to make a claim.
Our team is always keen to share its knowledge and help you 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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