Why You May Need Landlord Insurance

Purchasing an investment property can have many short and long-term financial benefits, with many Australians continuing to view property as a smart investment. Together in partnership with our landlords insurance partner and product issuer CGU Insurance, we’ve put together a few reasons why you should consider landlord insurance as part of your investment strategy.

Why is landlord insurance important?

As a property investor, landlord insurance can give you peace of mind as it provides a level of protection following a covered incident. If something were to go wrong with your investment property and you didn’t have the right insurance cover in place, you could find yourself thousands or even hundreds of thousands of dollars out of pocket. That could mean that the property you purchased as a way to generate income, ends up costing you money instead    

The cost of your landlord insurance will depend on several factors, including the value of the investment property and the level of cover you want to have in place. Although it’s tempting to choose a policy with a low premium, it’s important to remember that this can mean you may not have adequate coverage which can cost you money in the long run. It’s important to understand exactly what you would and wouldn’t be covered for following an incident and that you select the level of cover that’s right for your situation.

What can my landlord insurance cover?

The level of cover under your landlord insurance will depend on the specific policy. However, there are four main areas that you need to look for when it comes to cover.

Building –Your building cover on your policy should cover the structure of your investment property as well as fixtures and fitting such as pipes, fixed appliances, gas or plumbing systems, exterior blinds and some external structures. If your building is already insured by an owner’s corporation or strata, you may want to insure just the contents of the investment property.

Contents – Although your tenants will need to have their own insurance to cover their personal belongings, you need to cover items which aren’t viewed as a structural part of the house. These include carpets, curtains, blinds and appliances. This is particularly important if you’re including furniture in your investment property.

Tenant issues – As a landlord who takes on tenants, you should have cover in place for associated risks. The areas of cover to look for are rent default, damage caused to the investment property, loss of rent, theft, vandalism and liability cover.

It is also important to note here the difference between rent default and loss of rent. Loss of rent can be explained as the lost rental income if the investment property were to become uninhabitable by the tenant due to fire, flood, serious building damage or other major issues with the property. On the other hand, rent default is when the tenant stops paying rent.

The level of cover you need will depend on your situation so invest the time in reading your policy to understand the inclusions and exclusions carefully to make sure you have the right cover in place. For more information about landlord insurance, visit here.

Queensland Country Bank Limited ABN 77 087 651 027 AFS Licence No. 244533 acts under its own Australian Financial Services Licence and under an agreement with the insurer, Insurance Australia Limited ABN 11 000 016 722 AFS Licence no. 227681 trading as CGU Insurance. Landlords Residential Property Insurance issued by CGU. Product Disclosure Statement (PDS) available from any office of Queensland Country Bank. You should consider the PDS in deciding whether or not this product is right for you.

This article contains general advice only and does not take into account your individual objectives, financial situation or needs ('your personal circumstances'). Before using this advice to decide whether to purchase these insurance policies, you should consider the appropriateness of it having regard to your personal circumstances, plus obtain and consider the current Product Disclosure Statement.