Purchasing an investment property can have many short and long term financial benefits, with many Australians continuing to view property as a smart investment. Let’s look at why landlord insurance is recommended as part of your investment strategy.
Why is landlord insurance important?
Landlord insurance gives property investors peace of mind as it provides a level of protection following a covered incident. If something goes wrong with your investment property and you don’t have the right insurance cover in place, you could find yourself thousands or even hundreds of thousands of dollars out of pocket. That could mean that your carefully purchased investment ends up costing you money.
The cost of your landlord insurance will depend on several factors, including the value of the property and the level of cover you want to have in place. Although it’s tempting to choose a policy with a low premium, it’s important to remember that this can mean you don’t have wide coverage which can cost you money in the long run. It’s important to understand exactly what you would and wouldn’t be covered for following an incident and that you select the level of cover that’s right for your situation.
What will my landlord insurance cover?
The level of cover under your landlord insurance will depend on the specific policy. However, there are four main areas that you need to look for when it comes to cover.
Building –Your building cover on your policy should cover the structure of your property as well as fixtures and fitting such as pipes, fixed appliances, gas or plumbing systems, exterior blinds and some external structures. If your building is already insured by an owner’s corporation or strata, you may want to insure just the contents of the property.
Contents – Although your tenants will need to have their own insurance to cover their personal belongings, you need to cover items which aren’t viewed as a structural part of the house. These include carpets, curtains, blinds and appliances. This is particularly important if you’re including furniture in your investment property.
Tenant issues – As a landlord who takes on tenants, you should have cover in place for associated risks. The areas of cover to look for are rent default, damage caused to the property, loss of rent, theft, vandalism and liability cover.
The level of cover you need will depend on your situation so invest the time in reading your policy to understand the inclusions and exclusions carefully to make sure you have the right cover in place. Read more information about CGU landlord insurance.
Insurance issued by Insurance Australia Limited ABN 11 000 016 722 trading as CGU Insurance. Any advice is general only. Consider the relevant PDS available from cgu.com.au to see if a product is right for you.