Why Landlord Insurance is Critical
Not sure what landlord insurance is, or why it's important?
Let's shed some light on the situation!
Like any form of insurance, it is a safety net. A contingency plan for when unexpected things happen.
What happens when there is a leak from a shower that causes damage to your home?
You've got home insurance to protect you.
What happens when someone crashes into your car?
You've got car insurance to guide you.
What happens when your flight is delayed and you miss your connecting flight?
Travel insurance protect you.
So it's understandable that you'd have landlord insurance for your rental property - to protect you and your investment.
Although there is no set percentage, there is always a good chance that with sourcing the right tenants, that you'll have renters who respect your property, pay rent on time and look after your investment. However on the off chance you secure bad tenants, landlord insurance is vital in providing security for your property.
A well designed insurance policy can protect you from lawsuits by tenants for injuries or from losses to your rental property caused by everything from fire and storms, to rental arrears…all the way through to illegal drug labs, tax audit and covering the costs to change locks.
Need a Key Example of Why Landlord Insurance Is Important?
Example: Tenant loses job and can no longer afford rent.
Great tenants, always pay their rent on time, and suddenly one of the tenants loses their job.... what happens?
The tenant advises they may have trouble paying their rent on time in the next few months, so mention they will want to break lease.
In a break lease situation the tenant is responsible to keep paying rent until we find a replacement tenant at the same rental amount, or alternatively be responsible for any shortfall in re-negotiated rent.
Sometimes in the current rental climate, it can take time to find a suitable tenant. In this situation after persevering for a while, the tenant could no longer afford to pay the rent, and vacates the property and ceases rental payments.
The good news about landlords insurance, is it covers rent loss in all types of situations including this one (some insurers will cover until the property is re-tenanted and other are capped at a certain amount of weeks).
We can’t control everything that happens to a tenant, and this is why landlords insurance is so important.
For a reasonable annual fee, you can have peace of mind incase something out of your or our control occurs. Just because your tenant loses their job, doesn’t mean your bank won’t put a hold on your mortgage payments. As a result, we can’t stress the importance of landlord insurance enough.
Protect yourself and your investment by arming yourself with the right kind of insurance. It may seem like an unwelcome extra expense, but you will be so grateful you have it if and when things go wrong.
Need advice on landlord insurance? Talk to us - we have contacts with major insurers in the industry and can guide you on finding the right option for you and your property.