Landlord Insurance on Self–Managed vs Professionally Managed Investment Properties

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Landlord Insurance on Self–Managed vs Professionally Managed Investment Properties

What is landlord insurance?

If you’re a landlord, there are a number of risks that can occur to your rental property, from damage caused by nature or tenants to missed rental payments. Opting for landlord insurance can save you a lot of money if something unexpected happens to your property. Typically, landlord insurance will cover potential legal expenses, missed rent, theft, public liability, and damage from tenants. But if you’re in two minds about whether to manage a property yourself or hire a property manager, you might be wondering if that affects your insurance.

Luckily, self-managing a property shouldn’t affect the ability to obtain landlord insurance, though a professional property management company can probably source you a better deal through their connections. If you’ve already paid for building and content insurance and aren’t sure why landlord insurance is needed, we recommend reading below for reasons why opting out can cause problems for you and your property in the future


Insuring a rental property: Do I really need to?

 

Roughly 55% of self-managed landlords don’t have landlord insurance as they believe they can keep a close eye on tenants or recoup all losses from the bond. But aside from cosmetic damage, such as stained carpets or scuffed flooring, a lot of property damage can quickly exceed a bond amount. If a tenant causes a large amount of damage or finds themselves unable to pay rent suddenly, a landlord who relied on a regular stream of income can quickly find themselves left in the lurch. Even if you have a dream tenant who always pays on time and has taken good care of the property, there’s always a risk that something out of people’s control can happen that will directly influence the property.

Self-managed investment property insurance

When it comes to managing a property yourself, there are a lot of things to consider. If you’re holding down a full time job, the process of finding a tenant and looking after your investment property can be very time consuming. Choosing the right tenant is undoubtedly one of the most important factors as a demanding tenant can end up taking a lot of time and resources to keep happy. Ideally, the right tenant will pay on time, maintain the home, and only contact a landlord when something needs fixing.

To qualify for landlord insurance, a landlord must regularly maintain their property – this includes sourcing and paying for tradesmen, setting up appropriate times for the tenants, and organising regular inspections. Landlord insurance also requires that you adhere to the numerous laws and regulations required, such as building safety and strata laws. Feigning ignorance, no matter how genuine, can end up getting you into a lot of trouble. By hiring a property manager, you’re placing your home in the hands of a professional who can make sure you’re adhering to legislations.  

Regardless of whether you choose to go with a property manager, all landlords should have landlord insurance to help mitigate any risk to the property. Standard building insurance will not cover common tenant related risks such as loss of income, or a tenant suddenly breaking their lease. When it comes to insuring a rental property, it pays to cover all bases – landlord insurance and building and content insurance (home insurance covers public liability).

We hope you’ve enjoyed reading our blog about investment property insurance. If you’d like to chat with one of our investment property management experts for some advice about landlord insurance or help managing your property, please get in touch on admin@beyondpm.com.au. Or check out our blog on ‘5 Common Traps Landlords Fall For & How To Avoid Them

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