An investment property needs to be appropriately protected. Residential Landlords’ Insurance can give you peace of mind and confidence that your property will be looked after should something go wrong. For an outlay of a few hundred dollars a year, you can be covered for not only damage to buildings and contents, but also for rental default and damage by tenants. If your property is rented through Airbnb, insurance is slightly more involved and our article on this can help.
Residential Landlords Insurance are categorised into two different covers:
Accidental Damage to Building and/or Landlord Contents
A sudden unforeseen event or happening causing physical loss or damage unexpected and unintended. If the Building or Landlord Contents are covered by the policy, cover is provided for Accidental Loss or Damage caused by physical loss or damage including Defined Events which happens at the property address during the period of insurance not otherwise excluded. There are policies based on a Defined Events wording which will include an optional benefit for Accidental Loss or Damage. When the optional Accidental Loss or Damage benefit has been selected cover is generally provided in addition to the Defined Events set out in the policy.
Defined Events to Building and/or Landlord Contents
Covers only the events nominated and listed by the Insurer in the policy wording (also known as Listed Events or Insured Events). As the name suggests Defined Events policies cover those events defined (or listed) in the policy along with any Additional Benefits all subject to policy exclusions. Some Insurers will offer Defined Events cover with an option to upgrade to Accidental Damage for an additional premium.
Residential Landlords have key exposures such as:
If Insured did not occupy the home and it was, with Insurer’s prior knowledge, rented to others immediately prior to it being damaged by a defined event, rendering it unfit to live in, Insurer may pay the net loss of rental income (limited to the rentable value of the home immediately prior to damage) until the home is fit to live in. Usually cover is for loss of rent for no more than 12 months from the time the damage occurred.
When a policy covers Rental Default or the optional Rent Default cover has been selected, the benefit will generally extend to include any legal costs incurred by the Insured to legally evict a tenant or to recover any amounts owed by the tenant. When Rent Default include Theft by Tenants, this benefit may also extend to include legal costs to recover amounts for the items stolen by a tenant and/or their visitors. This will generally be a nominated value and an excess may apply. Benefit may also be subject to the Insurer’s consent.
Any malicious damage caused by tenants or persons at the risk address with the Insured’s consent. The most common exclusions are: