Landlord insurance is an essential part of managing the risk associated with owning an investment property.
Every time our Property Management team brings on a new landlord, we take the time to discuss what landlord insurance is, and why we feel it is necessary for every investor to have it in place.
Despite the best of intentions, and diligent processes tied to tenant selection and managing arrears, there is always the chance that your tenant could vacate the property early, or worse, cause damage to the home.
That is where landlord insurance comes in, as landlord insurance covers you for tenant related losses.
Examples of this include: loss of rent due to a tenant breaking their lease or been evicted, or damage caused to your contents by tenants, like drink spills on carpets.
Property insurance may not cover these events, and whilst the tenant always pays a bond, rarely is that enough to cover the associated losses or costs.
We have had one recent example where a tenant vacated the property before the lease was up, and stopped paying rent. Despite an application immediately being made to tribunal, the property sat vacant for a period of time, and the landlord had to incur costs for re-letting the property and re-advertising, as well as the cost of having the property sit vacant for so long.
In the end the tribunal ruled in favour of the landlord, and the tenant is required to pay back the $6,000 that they owe. However the impact on cashflow put extreme stress on the investor. Had they have acted upon the advice they received and put an insurance policy in place much of this stress and financial loss could have been mitigated.
Like most insurance, you won’t realise the value until it’s too late, but if you are considering renting your property, or already have tenants in place and want to get insurance, the team at Ray White Belconnen can help you get a suitable policy in place.