Posted on: December 29, 2022

Time to Bust the Biggest Myths About Landlord Cover

About 2.4 million households were tenants of private landlords in 2021, according to the Australian Institute of Health and Welfare. As one of those landlords, it makes sense to separate the fact and fiction of insurance to protect your investment.

Myth: My property is covered when my tenants go on holiday

It’s good practice to ask your tenants if they’re planning to leave your property unoccupied for an extended period. That allows you to check your insurance to ensure it covers the property in their absence. Insurers may restrict your cover depending on how long your property is unoccupied.

Myth: Landlord insurance will cover me for loss of rent in any eventuality

No insurance will cover you for any eventuality. However, these circumstances may trigger landlord cover depending on your policy:

  • Your tenant(s) defaulting on rent
  • Tenant(s) eviction
  • The death of your tenant
  • The tenant getting a hardship order
  • Unsafe living situation due to an insured event, such as after a natural disaster – flood, fire, etc

Another myth is assuming tenants should be on a fixed-term rather than a periodic lease so you can claim for loss of rent. Policies vary, so it’s best to check the fine print. And, if your property is a unit, apartment or flat, the insurance cover of the body corporate, if one exists, generally only covers the building and common areas.

Myth: Your insurance is set for life

Most policies usually run for 12 months, after which you’ll need to renew them. Insurers must give you a fortnight’s warning that your policy is about to expire. That email could be easily missed in an overflowing inbox, particularly if you don’t have direct debit payment.

Be sure to update us about any changes to your property or circumstances, including:

  • Renovations that will affect your risk or sum insured
  • Moving from long-term rental to Airbnb. Landlord insurance may only cover stays of three months or longer due to higher risks from shorter stays. However, a new insurance product, short-term rental insurance, is increasingly becoming available.

At renewal time, check for policy changes that may have occurred since you initially signed up for it.

Here’s one substantial change that happened late last year. That’s when major insurers agreed to stop pursuing renters to pay for unintentional or accidental property damage, says consumer organisation Choice. As for what types of intentional damage are covered, insurers differ in their definition and determinations.

Myth: Self-management saves you money

Outsourcing rental property management will cost you between 4% and 15% of the weekly rent and GST, says Smart Property Investment. This offers value because the manager will:

  • Carry out periodic inspections to ensure the tenants are maintaining the property well
  • Pay bills on your behalf from the rent collected, such as council rates, water services and land tax, if you wish
  • Organise emergency repairs
  • Source tradespeople and local vendors in bulk, so generally means discounted services
  • Sort out periodic mandatory tests of gas, water and smoke detectors
  • Know about the legal rights and responsibilities of landlords and tenants
  • Act promptly when the rent falls into arrears.

Also, the fees you pay your property manager are tax deductible.

Talk to us for guidance on the best-fit policy for your investment property. We can negotiate on your behalf to achieve a discount on your premium. That’s often the case when you bundle separate policies into a package.

Importantly, we’ll tell you what’s covered and not and update you on policy changes over time.

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