Owning and renting out property is just one of the benefits that befall a homeowner, although it is not without risks. Landlordship and the responsibilities that come with can plague the minds of owners who may not possess the solution that offers peace of mind and financial support in dire circumstances. If you had not considered landlord insurance and the importance it serves in protecting your asset and rental income, understand what you could be entitled to.
What is landlord insurance?
Landlord insurance is a policy that covers a property owner from financial losses that are associated with rental properties. Specifically covering the building and contents that may belong to the landlord, it is also commonly known as buy-to-let insurance. The policies vary in inclusions, but will typically cover the loss of rent due to tenant default right through to structural damage.
The difference between landlord insurance and building insurance
The stumbling block comes when owners are unable to distinguish the difference between a landlord and building insurance and are unsure of which route to pursue. Building insurance relates to damages that may occur as a result of fires, flooding or other unpredictable circumstances. This will not necessarily cover damages that are made by tenants renting the space. Conversely, landlord insurance will cover tenant damages, as well as rental income that may be lost due to tenants defaulting on the rent and leaving abruptly due to unforeseen circumstances. Insurance providers will offer varying attributes, so have a clear understanding of what is covered and what your entitlements are before selecting your provider.
Consider this scenario
If you can’t imagine a circumstance in which landlord insurance would benefit your standing, then consider this scenario.
Your tenant has been paying rent consistently for nine months, before unexpectedly defaulting for two weeks. After an additional three week period of correspondence with your property manager and tenant, they leave the premises. Due to extenuating circumstances and proven hardship, a court order has excused the five-week rent default leaving you with a loss of rental income.
Upon surveying your property, you notice there are some structural damages made on the property that will prohibit new tenants moving in before it is fixed. A contractor has quoted that the work will be complete in two weeks, but it ends up taking three. The tenant’s bond does not cover the work completed and you are facing building fees and an eight-week deficit of rental income.
An undesirable position to be in, and one that is not outside the realms of possibility. Don’t be a victim of circumstance and take advantage of landlord insurance and the safety net that it extends to you and your asset.
If you require support in navigating landlord insurance and understanding what to look for in the policy, discuss your options with our experienced My Rental team on 1300 828 652.