Why all Investors Should Obtain Landlord Insurance

Leasing an investment property is a savvy financial strategy, but it’s not without some element of risk.

Missed rental payments and damaged properties. Pick the wrong tenants and your investment property dreams could quickly spiral into a nightmare.

With highly experienced and dedicated property managers, the chances of this happening are substantially reduced.

We undertake extensive vetting of all prospective renters to help ensure you get responsible tenants who will take care of your property.

However, even extensive background checks don’t offer a foolproof guarantee that nothing will go wrong.

Even renters with excellent track records may accidentally cause damage to your property. Tenants may lose their job, become sick or injured. This could lead to them defaulting on rental payments.

That’s why it’s important for all property investors to obtain landlord insurance, so that you’re always protected in the event of unforeseen circumstances.

What is landlord’s insurance?

As a property investor, it is likely that your building is already insured for most natural disasters such as storms, flooding and fires. You probably also have contents insurance to cover fixtures and fittings such as lights, carpets, ovens and curtains.

However, landlord insurance goes beyond this. It will cover costs you may incur as a result of actions your tenants may take that impact your investment.

For example, should you need to take legal action against a tenant who does not comply with the terms and conditions of your rental contract, landlord insurance can cover the legal costs.

Landlord insurance can also cover you in the event that a tenant vacates your property prior to the end of the contract, or defaults on rental payments. This can be very valuable to an investor who has to make monthly mortgage repayments, especially if you’re reliant on the rental income to make those payments.

Other possible ways in which you can benefit from landlord insurance include reimbursement in the event your tenant steals items or damages your property. You can also be covered should a tenant make a claim against you.

Imagine a scenario where a tenant damages your property, preventing you from re-leasing it to a new tenant for several months. Not only would you need to cover the repair costs, but you would also be missing out on rent during that time.

Landlord insurance can even cover the cost of replacing locks after a tenant vacates, if they have not returned your keys.

How much does landlord’s insurance cost?

It is estimated that up to 30% of all landlord insurance claims relate to unpaid rent. When you consider the expenses you’ll incur for missed mortgage repayments because your tenants haven’t kept up with their rent, the costs of obtaining landlord’s insurance are comparatively small.

On average, the cost of landlord insurance will be approximately 1.5% of the rental income you receive from your investment property.

That’s a small price to pay for substantial peace of mind.

As with all insurance policies, it is important to read the fine details. Do your homework and shop around. Make sure you know exactly what is included in the policy before making your decision.

How can Devine help you?

At Devine Real Estate, we have decades of experience helping landlords. We conduct thorough background checks on all renters and provide landlords with strategic advice in managing their investment.

Speak with us today for further information on the best strategies for managing your property portfolio.

Steven Devine 
Director 
Devine Real Estate 
T: 02 8789 0217 | M: 0419 202 930

https://www.devinere.com.au/

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