What exactly IS a Landlords Insurance policy?
If you rent out a home, unit or townhouse, you might be confused by all the different Landlords Insurance covers. What are they all? Which ones do you need?
Your Consolidated Insurance Broker can create a landlord’s package that has everything you need, above all, they will explain what you don’t need so you don’t double up!
When you are a landlord, you need to cover the following 5 things:
- “I want to insure my building against storm and perils!”
Insuring the building is probably your biggest concern if you own a home. If you own a unit or townhouse, your building will likely be covered under a Body Corporate Insurance already. Your CIB broker can explain how you track this down. - “Do I need to worry about contents?”
Even if you are letting your home or unit unfurnished, you will almost always have a few fittings such as curtains and blinds to insure. For instance, if you insure your building with us, your CIB broker will make sure you get some cover for these fittings automatically. If you let a unit, we will suggest a nominal value of $10,000 to get you started. - “What happens if my tenant damages things?”
A normal home policy will not cover malicious damage by a tenant. Your CIB broker can recommend a landlord policy which includes cover for both Malicious Damage AND Accidental Damage. These sorts of claims have a bigger excess, and can be tricky when there is multiple sources of damage. In addition, your CIB claims manager will help you negotiate this with the insurer to try to get you the best possible outcome. - “I rely on that rent to pay the mortgage…”
There are two ways to insure your rental income:
1) Replacement income if the premises are damaged (e.g. storm/fire) and you cannot rent them out while they are being repaired
This is called “Loss of Rent” and your CIB broker can make sure you have cover for up to 2 years of rebuilding/repairs as standard
2) Replacement income if you have a tenant who is not paying rent, and you are trying to evict them
This is called “Tenant Default” cover – and this usually has very specific requirements when lodging a claim - “My tenant hurt themselves and want to sue me!”
As a landlord, one of the most important things to cover is your Landlord Liability. This protects you if you are sued by someone injured in your rented premises. Body Corporate Insurances will have Public Liability for common areas only, Therefore, you need to make sure you have your own landlord liability cover once someone steps inside your unit/townhouse!
Landlord Insurance Frequently Asked Questions:
My tenant can’t pay due to COVID-19, can I claim?
This is a common question at present, and is very complex to answer. It will need to be worked out case by case. When someone cannot pay rent, you must try to evict them to be eligible for most tenant default claims and keep their 4 week bond first. Unfortunately, policy wordings do not allow for compassion. With the Australian Government moratorium on evictions, an eviction might not be possible either. Similarly, if you accept a reduced rent amount, your tenant is not defaulting any more – so there is no claim.
Can I add Tenant Default Cover to my Policy?
If you don’t already have a landlord policy with Tenant Default cover, your CIB broker cannot give you this cover at present. All of our insurers have an “embargo” in place which stops this cover for new customers due to COVID-19.
What happens if my Tenant trashes my property?
A proper landlord policy will cover malicious damage by tenants, but this often creates issues with claims. For instance, it is important to know the following:
- If things were damaged at different times, each “event” is possibly subject to a new excess. Malicious Damage excesses often start at $900 – so it is important to try and narrow down when damage occurred. Having a good property manager for this can help a lot.
- Damage by pets may not be covered or only have very limited cover for chewing / scratches.
- General cleaning costs (if your tenant was “dirty”) is not covered under malicious damage. Hopefully you have a bond you can use instead!
How can CIB help?
Your Insurance Broker works for you. You pay our fee, and the commission we take comes from the premium you pay. Your CIB invoice lists exactly what we earn; no secret commissions, only full disclosure.
Every year your CIB broker will get an insurance quote from each of our 6 reputable Australian insurers, additionally, it is our job to work with the insurer during the claim process and to pay your claim. We help you understand how your policy works so you get the most out of it.
At CIB we work on your behalf to source a true Broker Landlords Insurance Accidental Damage policy that protects your home from all risks, including flood damage. Over the years, we’ve built relationships with a panel of 6 preferred home insurers based on trust and great claims experiences. No matter what, we can help you Get the right cover for your home.
Do you have your own home and contents you need to protect? We can help with that too! Ask us about our Home & Contents Insurance.