We sat down with Christian Athanasakis, Account Manager at Insurance and Risk firm, Omnisure, to explore the often complex world of landlord insurance and why it is important for property investors to understand.
Q: What is landlord insurance? What does it cover?
A: Like home insurance, landlord insurance can cover property investors rental property and its contents against risks like storms, floods and fire. It can also cover the damage that tenants can cause to your contents - even loss of rental income.
Landlord insurance is a product that has four key coverages, including:
Legal liability and;
Rental income received from the tenant/s
Q: Why is it important for property investors to have adequately covered insurance?
A: As mentioned, landlord insurance protects investors from any financial losses associated with their investment property. If the policy cover is inadequate then investors could be left with out-of-pocket expenses.
Q: When should I take out landlord insurance?
A: With the key coverages, it is important taking up the landlord insurance product upon settlement of the investment property.
Once the property has been settled, investors will be liable for the damages that are incurred whether from malicious acts or natural events. It is vital to cover the investment property once ownership is obtained to prevent unexpected expenses, which will ultimately reduce the investment/s return.
Q: Generally, how much does landlord insurance cost per year?
A: All four aspects of coverage under the landlord's insurance product are rated individually between different risk addresses, tenant details and amounts insured.
Having a discussion with an insurance broker will assist with reviewing certain options available to reduce the premium without having to detriment the coverage or policy.
Q: What is covered by body corporate/strata?
A: Through these corporations, they arrange strata insurance to ensure the structure of the buildings is correctly insured and looked after.
Outside providing cover for the structure of the building, these policies can include cover for the common areas, the legal liability for the title, and owner's corporation, including basic coverage for lot owners fixtures and fittings.
Q: What should property investors know about building insurance for multi-dwelling residences?
A: Strata/body corporate will be applicable for units, townhouses, and the like. These corporations are implemented when there are multiple owners within a single building or on the same land title to ensure every owner’s responsibilities and intentions are met.
Each strata insurance product is different consisting of its own coverage limitations and inclusions. The insurance product will often refer back to the by-laws of the strata as well, which can place onerous insurance requirements back to the lot owner. The gap in coverage for strata insurance can be covered through a landlord insurance policy developed for lot owners.
Q: What is the best way to find an appropriate landlord insurance provider? And, how do I compare the options?
A: There are many landlord insurance providers in the insurance market, however finding a provider that will be suitable may be time-consuming and difficult to locate.
With different conditions and levels of cover applicable between all the providers, it may prove to be a challenge.
The most accurate way to compare options would be reviewing the PDS/policy wording of the provider as their conditions and coverage are explained within these documents.
Alternatively, discussing with an insurance broker can help compile options from multiple different providers and assist with providing a suitable landlord insurance product for your investment.
Disclaimer: When landlord insurance it is always prudent to seek the advice of appropriately qualified professionals to determine which strategies are most appropriate for your circumstance.