The one thing investors can’t afford to skip

Your investment property is one of your most valuable assets and just like everything in life, there are associated risks with owning and managing it.

So in short, the answer is yes.

It would be a foolish landlord who thinks that their investment property (or lease for that matter) is free from any risks because they have a great property manager or outstanding tenant.

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Most good landlord insurance products will cover more than a “bad tenant” scenario and have inclusions that cover a wide range of unforeseen situations.

While some scenarios may not be so common (for example, the death of a tenant), others could possibly happen in any ideal tenancy such as accidental damage or even a very common occurrence of a lease break.

Yeah, it’s moments like this you’ll wish you had landlord’s insurance.

Lender’s insurance can help you avoid stressful situations like this.

It is absolutely crucial that you know what events and circumstances your landlord insurance covers and what it doesn’t.

The fact is that despite extensive tenant selection processes and impeccable tenant history, you can never predict what events could take place with your property or within your tenant’s personal life which may affect their capacity to pay their rent and look after the property.

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In addition, it is important to find out whether your policy also covers building, contents or even pet related damage. Read the fine print. For example, will your policy cover damage from your tenant’s approved pet or will it also cover other animals that were allowed into the premises? Not all policies may offer these additional protections so once again, make sure you read the policy documentation before signing up.

Yep, lender’s insurance will cover that.

What would cover this? Yep, you guessed it – landlord’s insurance!

A common question I get from landlords is: “Why do I need insurance for these scenarios? Can’t I just go to the tribunal and get an order? Won’t the tribunal make the tenant compensate me?”

Well, yes, but anything over the bond may be difficult to recover from the tenant. While the tribunal has the power to give you the entire bond, anything over the bond will have to be enforced either through debt collection agencies or the magistrate’s court.

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This can be a long, drawn out and expensive process. It is worthwhile comparing landlord insurance policies available and the differences in what will be covered. This also includes the excesses payable on each claim, particularly in relation to loss of rent.

If you are unsure about which product is best for you, then make sure you ask your property manager. While they are not qualified to give you specific advice on insurance products, they can certainly provide you with the contact details for policies that they are more familiar with and which might be right for you.

Paul Edwards is REISA’s legislation and industry adviser.

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