Property Insurance, What to Look For

You wouldn’t drive a car uninsured, so the same goes for your property. You want to make sure it is appropriately insured to make sure you are financially protected.

In 2018, Travis Adams from Perth learned this the hard way when he discovered his tenants had trashed his investment property – leaving him tens of thousands of dollars out of pocket in clean-up and repair costs.

With Adam saying; “There’s wiring damage, plumbing damage….All the walls need repainting, flooring needs replacing, kitchen needs replacing and a thorough pest eradication due to cockroaches and rats…. just a complete mess…. It’s heartbreaking”.

Safely, Adam was not adequately insured for the damage caused by his tenants.

Many people assume that if they purchase home insurance, it is enough to cover their investment property. But is it?

When it comes to insuring your investment property, there are actually many different insurance options you can choose from.

Lets’ cover them off below;


Building Insurance:

This is the insurance that covers the structure or fabric of your property including the plumbing and gas systems, pipes, cables, fixed appliances, exterior blinds and awnings, certain external structures and fixtures and fittings (excluding carpets, curtains, and internal blinds). This type of insurance is essential for all properties, except those managed and insured by a strata scheme.

This insurance covers you for the partial or complete destruction of your property, however not all insurers will include damage caused by tenants and their guests as part of the standard policy. Make sure to check!


Contents Insurance:

Many people assume that as they are leading their property as unfurnished, that they do not need contents insurance. This is incorrect.

If your property contains blinds, carpets, curtains, internal blonds, non-fixed appliances then you will need to take out contents insurance for this. Once again, make sure to check that damage by tenants and their guests are covered as part of the policy.


Loss of Rent:

As a landlord, you should make sure that your insurance policy (whether building and contents or just contents) protects you against loss of rent.

Ideally, your policy should cover you for the unexpected loss of rent even if it is not due to property damage. For example, you can insure yourself against loss of income if your tenant leaves without notice.


Civil Liability:

A very important part of insurance for landlords is civil liability in case a tenant or their guest becomes injured or dies on your property. Sometimes the simplest things like a loose paving stone lead to injury and litigation.

You don’t want to be on the receiving end of a compensation lawsuit and realize you don’t have insurance.


Steps to Choosing an Insurance Policy:

Decide on what kind of insurance you need. Do you need the full package, or do you just need contents insurance with a few landlord-friendly inclusions?

Decide on the level of cover you need. What is a reasonable payout for damage or loss of property? How many weeks of rental income loss would you like to be protected against?

Do you need any special features in your cover? For example, if you live in a flood-prone area, you may want to choose a policy that protects against flood, water damage or dampness.

Shortlist several insurance options and read the Product Disclosure Statements to find the most suitable policy for you.


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