The horror stories are everywhere, we’ve all heard them. And many investors have experienced huge out of pocket expenses due to inadequate or incorrect insurance policies. As a property owner, you simply cannot afford a lax attitude towards house insurance (sometimes, quite literally can’t afford it). But with so many options, how do you know which cover is right for you, or even where to start? Glad you asked! We’ve put together a few helpful tips to fill in some of the blanks.
Do investors need house insurance?
Quite simply, the answer is yes. It is compulsory for investors to have an appropriate level of house insurance to cover public liability for their investment property. So what is an ‘appropriate’ level of insurance? Well, the standard rules regarding building and contents insurance still apply for your dwelling, regardless of who is residing there. However, it is a tenant’s responsibility to insure their own personal items within the property.
Property owner insurance
Investment property insurance, or landlord insurance, is an optional – but smart – extra. This type of house insurance specifically covers you for tenant-related risks, which are unavoidable when you rent out your home. Insurance against fires, storms and natural disasters is advisable. But as an investment property owner, you have the added risk of financial loss due to theft, damage to your property by tenants, loss of income if rent is unpaid, or even legal expenses if you take a bad tenant to court. However, not all landlord insurance policies are the same, so it’s important to check for conditions in your policy which suit your circumstances.
Talk to your property manager
If the process of finding the right house insurance is overwhelming you, speak with your property manager. They are there to guide you and help you make the best decisions for your rental property. Some proactive real estate agencies even offer guarantees of no property vacancies and no tenant damage – how good is that?
The bottom line is that house insurance is an absolute must if you own an investment property. As a landlord, you have a liability of exposure from the moment you or your agent begin showing potential tenants through the home. And as such, taking out investment property insurance is highly recommended. The cost of insurance is a lot cheaper than the potential costs involved of not having any. It’s just not worth the risk. There are plenty of affordable policies tailored to your needs, so speak with your property manager about the level of cover that is right for you. The best time to start is now!
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