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.