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Your landlord insurance questions, answered

BMT team — Mon, 17 May 2021 00:23:28 +0000

Taking out an adequate landlord insurance policy is one of the most important things for any property investor. You might get lucky and never need to use your policy, but there is no way to know this before the fact. BMT Insurance brokers specialise in finding policies designed for landlords just like you. Here are some of the most common questions they get asked regarding landlord insurance policies. 1. What is landlord insurance? Landlord insurance covers property investors for the risks associated with owning a rental property. This includes the environmental factors that could damage the property, like natural disasters. ‘People-related’ risks are also covered, such as tenant damage. 2. When do you need landlord insurance? You need landlord insurance as soon as the property you own becomes an investment. This includes the period where you are on the hunt for tenants as the property is ‘genuinely available for rent’. 3. What is included in landlord insurance policy? Each policy varies, but common items covered include: Natural disasters Damage from impact (e.g. fallen trees) Legal liability Theft Loss of rental income Rent default Tenant damage Legal expenses of taking tenants to court. 4. Is landlord insurance a legal requirement of renting a property? It’s not a legal requirement but is highly recommended. Just like any optional insurance coverage, landlord insurance covers you for factors that are out of your control. Without it you can be faced with a hefty expense that could result in a failed investment. 5. How is landlord insurance different from regular homeowner insurance? Landlord insurance and homeowner insurance are both designed to protect your property, but each are designed with different risks in mind. Homeowner insurance is designed for you and your items in your home- it doesn’t include cover for any landlord related risks such as tenant damage. On the other hand, landlord insurance is specifically designed for the risks associated with renting out your property, such as loss of rental income. 6. What is sum insured? By definition, sum insured is the maximum amount you can claim for any one insured event. This basically means your sum insured should be enough to cover you if the property had to be knocked down, cleared away, and rebuilt to the same standard. It’s essential to ensure your sum insured is fit-for-purpose. This means regular reviews of your policy to avoid being underinsured, which can result in you being out-of-pocket in the instance of an insured event occurring. 7. Does landlord insurance cover pet damage? It depends on the insurance policy – each one is different. However, it’s recommended to go with a policy that covers pet damage if you’re going to accept pets. Some policies may specify that a pet must be on the lease for related damage to be insured. This means communication is key with he tenant so there is no misunderstandings on whether a pet is allowed at the property. 8. How expensive is landlord insurance? There’s no one-size-fits all approach when it comes to determining the premium of a landlord insurance policy. Just some factors that an insurance company will look at when determining your premium include: Property type and location The contents you own within the property Additional inclusions Your claim history Property value and it’s replacement cost The structure and security of the property Nature of the investment, for example if it’s a short-term or long-term rental. 9. Does landlord insurance cover me if my tenants stop paying rent? Some landlord insurance policies include ‘loss of rent’ or ‘rent default’ cover. Loss of rent covers the situation where the tenant stops paying rent due to the property becoming partially or totally uninhabitable. For example, if the property experienced flood damage or was destroyed by fire. Rent default cover you for the situation where a tenant stops paying rent on their own accord. This could be for a number of reasons such as employment changes, illness or your tenant breaking their lease early and not paying the missed or remaining rental repayments. 10. How can I make sure that I have the right level of landlord insurance? Speaking to an insurance broker is a helpful way to ensure you have the adequate level of insurance. They will liaise directly with the insurers for you to discuss policy options and come back to you with what’s available. Our expert team has a wealth of experience in the insurance industry and access to a range of construction cost data through our Quantity Surveyor specialists. This data has been developed over a twenty-year period and is continually refined to reflect the dynamic construction industry. To learn more about BMT Insurance and how they can help you with your landlord insurance needs, contact the team on 1300 268 467 or Request a Quote.

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What insurance do you need if a tenant stops paying rent?

BMT team — Fri, 16 Apr 2021 05:44:07 +0000

Different investment types have different levels of risk and return. Investment properties carry their own unique risks when you consider the potential for property damage and tenant-related issues. Perhaps the biggest risk is that a tenant suddenly stops paying rent, halting your cash flow in its tracks. A tenancy agreement will outline what happens once a tenant has stopped paying rent and the processes that must be followed. But there is a way to ensure this doesn’t have a detrimental effect on your cash flow: landlord insurance. In this article, we will cover: What is landlord insurance Difference between loss of rent and rent default Should you have loss of rent or rent default cover? What is landlord insurance? Landlord insurance protects investment properties. While each policy differs, landlord insurance generally covers events like natural disaster, legal liability, theft, damage (both tenant and non-tenant related), legal expenses, loss of rental income and rent default. On the surface, ‘loss of rental income’ and ‘rent default’ appear to be the same thing. But in reality, they’re not and this assumption could lead to underinsurance. Sometimes a policy may include one and not the other, so it’s essential to always read the fine print. Difference between loss of rent and rent default It’s important to understand the differences between loss of rent and rent default. Failing to do so could mean you’re out of pocket if your tenant stops paying rent. Policies can differ greatly, but here are the essentials to know about both. Loss of rent covers for the loss of rental income if your investment property is deemed partially or fully uninhabitable due to an insured event. Loss of rent cover may be required after natural events such as flooding or fire. This could include damage not directly made to the property, for example street damage following a natural disaster that causes inaccessibility to the property. Depending on the policy, loss of rent cover could be paid up until the property becomes habitable again, or up to the policy limit (e.g. 52 weeks). Rent default covers you if a tenant stops paying rent. This often happens due to unforeseen circumstances on the tenant’s behalf such as reduced income, losing a job, illness or even death. Even with the most comprehensive tenant vetting process in the search, you can’t predict the future and you may be in the situation where the tenant stops paying rent. Rent default cover can provide that peace of mind you need for these unknowns. Should you have loss of rent or rent default cover? The ideal situation is to be covered with both. Doing so means you will be covered for any unexpected situations that could cause your cash flow to cease – whether it be tenant-induced or macro factors. You can make the process of finding the best-suited insurance policy easy with an insurance broker. They will discuss the coverage you want and find options you can choose from. Our expert team has a wealth of experience in the insurance industry and access to a range of construction cost data through our Quantity Surveyor specialists. This data has been developed over a twenty-year period and is continually refined to reflect the dynamic construction industry. BMT Insurance is an expert in the area and works with reputable insurance providers to find a suitable insurance policy for you. In the event of a claim, the team can also manage the process end-to-end. To learn more about BMT Insurance and how they can help you cover your investment, call the team on 1300 268 467 or visit their website.

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What type of insurance is required for your rental property?

BMT team — Tue, 08 Sep 2020 23:08:23 +0000

It’s no secret that finding a fit-for-purpose rental property can be a challenging task. Once you do find the perfect one, the next step is protection. You can have peace of mind with the right insurance required for your rental property. In this article we will look at: Understanding the importance of insurance What insurance is required for a rental property? Insurance when turning your home into an investment What insurance do you require following a renovation? How to make sure you have the right level of insurance Understanding the importance of insurance Your insurance should always cover you for devastating events such as fire or significant damage caused by tenants. If you don’t have enough insurance coverage, you’re underinsured. This means you can be thousands, sometimes hundreds of thousands, out of pocket when the worst-case scenario does happen. On the other end of the scale, it’s also possible to be over-insured. While you’ll certainly be covered, you’ll also be spending too much money on premiums. What insurance is required for a rental property? As a property investors, it’s important to know what insurance you need and how much. Landlord insurance This covers you for any tenant-related risks. While each landlord insurance policy is different, cover commonly includes loss of rental income and loss or damage of your contents and building by the tenant. It’s important to note that your tenant’s contents aren’t covered under your policy. Building and contents insurance This covers you for unexpected events and non-tenant related risks that can damage your rental property. For example, natural disaster damage which is usually covered under building and contents insurance includes damage caused by fire, storm and floods. Public liability insurance Often included in your landlord insurance policy, public liability insurance covers legal expenses that you may need to pay when an incident happens on your rental property. It’s important to understand your policy so that you know you’re covered on all bases. For example, landlord insurance sometimes includes building insurance and public liability insurance. Insurance when turning your home into an investment Rental properties and owner-occupied homes have different insurance needs. This is due to rental properties being exposed to different risks such as tenant damage or loss of rent. Insurance policies are designed to be fit-for-purpose and it’s common to turn a once owner-occupied home to a rental property. When this happens, property owners sometimes believe they can continue to hold their current policy. In reality, this isn’t how it works and doing so can expose you to many risks, both financially and legally. If you’re thinking about turning your home into an investment, contact an insurance specialist to ensure your policy is updated. What insurance do you require following a renovation? Renovating your rental property usually means that you’re improving it and adding value to the property. It’s always recommended to have your insurance policy reviewed following a renovation. Big or small, a renovation can change the construction cost of your property, and you need this cost completely covered. How to make sure you have the right level of insurance The most reliable way to ensure that you have the right level of insurance is to know the construction cost of your property. There are a variety of complexities and variables when determining an accurate building replacement cost. This includes current costs in the local area, cost escalation over time, removal of hazardous materials and land or site constraints. It’s important to talk to a specialist who can accurately determine the replacement cost to ensure you are adequately insured. To learn more about BMT Insurance and the additional services they offer Request a Quote or call the team on 1300 268 467.

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Bushfires offer a timely reminder for landlords

BMT team — Tue, 10 Dec 2019 03:58:43 +0000

Australia has suffered through an extraordinary bushfire season with almost 5 million hectares of land burned in New South Wales alone. Many areas across the country continue to battle the elements as fire scorches natural habitats and threatens to destroy hundreds of homes in its path. In places where fire hasn’t reached, smoke haze lingers as a stark reminder. 69 fires contiune to burn in NSW with 20 to be contained. Firefighters have worked tirelessly to slow the spread of fire and build containment lines ahead of increased fire dangers. Hot and windy conditions are expected to return to many parts of NSW this week. #nswrfs #nswfires pic.twitter.com/cSZL0dL73K — NSW RFS (@NSWRFS) January 19, 2020 The 2019-20 bushfire season offers a timely reminder of the importance of having proper home insurance. Authorities in New South Wales estimate that more than 1,500 homes have been destroyed by fire, so it’s vital that you have the proper insurance to protect your investment property. Are you properly insured? In 2018, the Banking Royal Commission’s probe into the insurance sector brought to light widespread misconduct and breaches of the Insurance Code of Practice. One issue that was raised was underinsurance, where policyholders were led to believe that their policies covered the full replacement of their properties but discovered their cover fell short when they made a claim. For property investors, this means facing considerable losses and risking financial hardship in the case of a natural disaster like a bushfire. More recently, an Insurance Council of Australia report found that a staggering 70 percent of Australians use their own judgement as the basis for an insurance valuation. This is an alarming statistic, given landlords could lose thousands if they have insufficient cover. Types of insurance to consider As a landlord, it’s essential to have an understanding of investment property insurance including building and contents. Building insurance covers the cost of repairing damage to the structure of your property, particularly in the event of a fire, storm or flood. While contents insurance covers for damage to, or loss of, personal possessions in the home. Of those with contents insurance who purchased a new high value asset in the past five years, more than half did not update their contents policy after making the purchase. In fact, a startling 23 per cent of homeowners said the highest value item in their home wasn’t covered. This leaves investors exposed in the event of natural disaster, especially given there may be thousands of dollars of claimable depreciable value left in destroyed assets. It’s important to contact a specialist Quantity Surveyor if assets are damaged as a site inspection may be required. Loss of rent cover is another option designed to cover your financial loss after damage to your property prevents it being tenanted. This damage may be caused by floods, fires, and any others indicated in the policy’s product disclosure statement. This cover may also apply where property access is prevented by damage to surrounding properties. With 77 per cent of homeowners exposed to significant financial loss, it’s more important than ever to review, renew or arrange proper home insurance for your investment property. As an insurance broker, BMT Insurance has access to construction cost data to provide a guide on estimated replacement costs on your property. This guide can help you to find the most cost effective insurance to meet your needs. For more information, contact the expert team at BMT Insurance or call 1300 268 467 today. Related articles: What is landlord insurance and what does it cover? Home and contents insurance you need for your investment property

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Home and contents insurance you need for your investment property

BMT team — Fri, 18 Oct 2019 00:17:14 +0000

Do you have the right level of insurance cover for your investment property? Both under and over insurance can impact your finances, leaving you unnecessarily out of pocket. Under-insuring puts your investment property at risk; if is destroyed or damaged you won’t have enough money to cover the cost of rebuilding or repairing. Over-insuring means you are paying more in premiums than you need to, reducing funds that could be better spent or invested elsewhere. The Insurance Council of Australia (ICA) commissioned Quantum Market Research to undertake a national survey of over 1,000 Australians in 2014 and found 83 per cent don’t have enough insurance cover to allow them to continue with the same standard of living. Protect your investment property and the assets within it by understanding the different types of insurance and what they cover. In this article we will look at: Building insurance Contents insurance Landlord insurance Building insurance Building insurance is designed to cover repair and replacement costs to the structure of your investment property from unexpected events such as accidental damage, fire, storms, earthquakes and floods. It usually provides protection for areas including fences, gates, garages, sheds, pipes, cables, drains and solar panels. The potential financial risks for owners of investment properties without building insurance is high. With one in 25 homeowners surveyed not having building insurance, ensure you’re protected with the right level of cover. With access to construction cost data and a range of insurers and policies, BMT Insurance can estimate the replacement cost of your property to help find you the most cost-effective insurance cover to meet your needs. The BMT Replacement Cost Estimator uses our construction cost data to provide a guide on estimated replacement costs. Contents insurance Contents insurance provides coverage for damage to, or loss of, personal possessions located within your home. A key finding of the ICA survey showed that 77 per cent of homeowners don’t seek professional valuation of their possessions. Instead they assess the value themselves. This means they may not have enough cover for their possessions. Alternatively, they may be paying premiums in excess of what they need. The survey also found one in four Australians don’t know what’s covered in their home and contents insurance policy. Landlord insurance Landlord insurance is designed to protect landlords against the risks associated with renting a property out. It can cover: loss of rental income loss or damage to building and contents malicious damage accidental damage theft or burglary by tenants legal expenses incurred when evicting a tenant. As it’s an investment expense, landlord insurance can also be claimed in your tax return. Read more about landlord insurance and what it covers. BMT can tailor an insurance package to suit your needs. If you don’t already have insurance or you’re unsure if your insurance is adequate for your investment property, contact BMT Insurance online or call our expert team on 1300 728 726 today. The information provided is general in nature and does not constitute personal advice. This means that whilst we may generally recommend the products we arrange on your behalf, we do not consider whether the product is appropriate for your own personal objectives, financial situation and needs in making the recommendation. You will need to consider the appropriateness of any information or general advice given, having regard to your personal situation, before acting on the above.

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What is landlord insurance and what does it cover?

BMT team — Wed, 14 Aug 2019 01:15:13 +0000

Under-insurance and over-insurance can put financial pressure on property investors, yet research shows that more than half of people believe they’re sufficiently insured based on an inaccurate valuation. An Insurance Council of Australia report from 2014 found a staggering 83 per cent of Australians are risking their homes and other valuable assets by not having enough insurance. This is troubling for property investors given they could either be paying too much for their insurance or at risk of losing thousands due to inadequate cover. Landlord insurance is particularly important for property investors given there are several risks involved in leasing out a property. What is landlord insurance? Landlord insurance is a type of insurance policy designed to protect property investors from tenant-related risks including loss of rental income and damage caused by the tenant. Landlord insurance may protect you from: Malicious damage by tenants Accidental damage by tenants Theft or burglary by tenants Loss of rental income due to tenant default Loss of rental income due to an insured event where the property becomes partially or wholly untenantable Legal expenses involved in evicting a tenant As landlord insurance is an investment expense, it can also be claimed in your annual tax return. It’s important to note that each landlord insurance policy will differ. Some policies will cover all scenarios listed above, while others will only offer limited cover. Why is landlord insurance important? Property is usually the single largest investment you make and underestimating the importance and level of insurance can be devastating. Having landlord insurance offers peace of mind should the unexpected happen. It also offers protection from risks that aren’t always covered by other insurance policies such as home and contents or building insurance. For example, building insurance typically protects the landlord’s property in the event of a fire, flood or storm but doesn’t necessarily cover for damage caused by the tenant. So, if a tenant maliciously vandalises your rental property, you may be out of pocket if you have inadequate insurance. While most tenants are responsible and will respect your property, it’s worth protecting yourself from the few who may not. Given most investors rely on rental income for cash flow, landlord insurance can provide a financial safety net. Organise insurance today So, what’s the best way to organise landlord insurance? As you start researching, you’ll discover there are many policies and providers to choose from. It’s important to think about the type and level of cover you want for your investment property. BMT Insurance helps investors find house, contents and landlord insurance and works with some of Australia’s most experienced providers to select the most suitable and cost-effective cover for you. As BMT Insurance is partnered with BMT Tax Depreciation, your required cover will be determined by experts who have access to the expertise and knowledge of construction cost consultants within the BMT Group. BMT Tax Depreciation’s construction cost consultants are equipped with the skills to accurately calculate the replacement cost of your property, which helps BMT Insurance determine the right level of cover for your most valuable asset. For more information, contact BMT Insurance on 1300 268 467 or Request a Quote.

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Best tenant screening processes and background checks

BMT team — Wed, 07 Aug 2019 06:35:32 +0000

Finding good quality tenants is often considered one of the biggest hurdles to property investors. To avoid being locked into an unpleasant rental agreement, it pays to perform a tenant background check before choosing who you allow to live in your investment property. Here are some ways to increase your chances of securing good quality tenants who are likely to take care of your property and pay their rent on time. Tenant background checks What information is needed from the tenant to conduct a check? What information is referenced when performing a check? What information is obtained following a check? Who can access database reports? What are the costs involved in obtaining a report? How else can I protect my investment? Points to remember when screening tenants Tenant background checks Landlords and property managers often use tenant screening services to conduct background checks. Tenant screening services contain historical tenancy information and are a good way to determine if a tenant is a sensible prospect to rent an apartment or house. Examples of screening services used to commonly access ‘enquiries’ databases and generate reports include: National Tenancy Database Tenancy Information Centre Australia (Tica) Trading Reference Australia Screening services run background checks to determine a tenant’s previous rental history, verify their income and employment and obtain a credit report to determine the ability of the tenant to meet rental obligations. What information is needed from the tenant to conduct a check? For a check to be conducted and a report obtained by the landlord or real estate agent, a tenant needs to provide the following: Full name Date of birth Photo identification (driver’s licence or passport) Email address Previous address Tenant signature authorising a credit report to be obtained Landlords or property managers should also contact previous landlords, ideally covering the past two years to verify dates of tenancy, monthly rent paid, reliability of payments as well as identify any issues the landlord experienced with the tenants, which may include any property damage. What information is referenced when performing a check? Former president of the Real Estate Institute of Australia (REIA), Malcolm Gunning identified that landlords and agents aim to obtain two results when conducting a tenant screening. They want to know if the tenant can make their rental repayments and if they have a history of looking after properties they have rented. To obtain this information, landlords and property managers will look at sources including: Screening services Past rental ledgers References from previous agents and tenancy database reports Social media sites including Facebook Credit reports What information is obtained following a check? Generally, the information found when conducting a tenancy search and obtaining a report includes: Tenant identity validation (to avoid identity fraud) Rental history details Blacklist information Bankruptcy issues via Australian Financial Security Authority bankruptcy register Court judgments, court writs and summonses Australian Securities and Investments Commission (ASIC) search results Previous searches on the tenant, who conducted them and when Visa status (where applicable) Search results from ASIC’s directorship databases Who can access database reports? Tenancy databases with annual turnovers of over $3 million dollars are governed by the Australian Privacy Act 1988. This law regulates the handling of personal information about individuals. Tenancy database reports can be accessed by landlords and property managers when consent is provided by the prospective tenant. The Office of the Australian Information Commissioner (OAIC) advises that under Australian Privacy Principles, individuals are also entitled to access database data about themselves to know what information is held about their rental history. An administration fee is often charged to cover the costs associated in locating and delivering this information from a database to the individual. What are the costs involved in obtaining a report? Australian leading consumer advocacy group, CHOICE conducted research to determine the process and costs involved in obtaining access to tenancy database information. They found that the National Tenancy Database (owned by Equifax) provides free copies of tenancy files within two weeks of request when emailing info@ntd.net.au. They also offer a $38.50 fee to access files instantly through their partner tenancycheck.com.au, but this method does not contain the additional information found in the former mentioned National Tenancy Database when searching the ‘enquiries’ database. Tica provides access to ten tenancy files online for an annual administration fee of $55. The report includes a search of both the tenancy database and its ’enquiries’ database. Additional charges apply for additional searches. Trading Reference Australia provides free copies of tenancy files within three weeks, or you can obtain it instantly for $22. Their online report only contains information from the tenancy database. Additional information was also requested including a phone number and employer information. Any fees associated in obtaining a tenancy report completed by a screening service, undertaking a credit check or sourcing information from relevant websites can be requested from prospective tenants. How else can I protect my investment? While undertaking background checks and screening potential tenants will go a long way towards protecting your financial interests and your investment property and minimising risks, it is also wise to obtain comprehensive landlord insurance that covers you against: Loss of rent Tenant damage (malicious and accidental) Theft by tenants Flood, storm and water damage Pet damage Standard building and contents insurance may not protect in the above-mentioned instances. It is estimated that up to 83 percent of properties are underinsured. BMT Insurance works with some of Australia’s most experienced providers and can assist you to find the appropriate level of insurance cover to meet your needs. Points to remember when screening tenants Be informed – Know what to look for, as past behaviour is a key indicator of future behaviour. People and the circumstances that affect them can change but be wary of those with an unreliable rent repayment history as you may want to investigate further. Obtain landlord Insurance – Obtain landlord insurance as standard building and contents insurance may not be enough to cover your property in the event of tenant damage or theft. […]

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