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The Importance of Getting Landlord Insurance

The Importance of Getting Landlord Insurance

If you own a rental property, you know that it’s not quite like owning your own home. There are unique risks and responsibilities that come with being a landlord. That’s where Landlord Insurance comes in. It’s a specialised insurance coverage designed to protect your investment and give you peace of mind.

Why Landlord Insurance Matters

Landlord Insurance is different from traditional home and contents policies, and it’s tailored to the specific needs of property owners who rent out their homes.

So, what is landlord insurance?

Basically, it covers you for the common risks associated with renting your property out.

  • Theft or burglary by tenants
  • Damage or vandalism to your property by tenants
  • Loss of rent due to tenant default
  • Legal expenses involved in evicting a tenant

If you don’t have landlord insurance, you’ll be liable for repair costs to your property should your tenants cause damage to the property. While you can minimise the risks of this happening by putting prospective tenants through a rigorous screening process, it’s not only malicious tenants who cause damage.

Accidents do happen, and if a renter is injured while staying on your property, you could be up for hundreds of thousands of dollars in liability claims.

Then there’s the risk of your tenant defaulting on their rent payments. The majority of tenants are sincere people who pay their rent on time every month, but even honest people hit difficult times. You may be relying on their rent for income or using it to cover your borrowing expenses. Either way, can you afford to cover any periods for loss of rent?

What is not covered by landlord insurance?

Landlord insurance is a great precaution for anyone who is renting/leasing out their property. However, there are some things that landlord insurance does not cover. These include:

  • Tenant repairs (handy work carried out by tenants that result in damage to property structure or contents)
  • General wear and tear (including mould damage or peeling paint)
  • Building defects
  • Tenant contents
  • Market conditions
  • Run-of-the-mill expenses (such as payment for lawn mowing service or a plumber’s bill for unblocking a clogged pipe)

Do you need landlord insurance?

There is no legal requirement for landlords to purchase landlord insurance, but it is worth investing in even just for peace of mind. Always remember, accidents do happen.

As a landlord, there is also a very real risk of a tenant defaulting on their rental payments. Changes to life circumstances or financial difficulty during economic downturns can result in loss of rental income which can affect your financial standings. Having landlord insurance will help cover these periods of income loss so that you do not have to.

Even reliable tenants make mistakes. Having landlord insurance minimises risk for everyone and saves any emotional and financial stress during a tenancy. 

Landlord insurance in a nutshell

Some landlords live in the hope that nothing untoward will happen to their rental property. But it’s a risk given all the things that can go wrong. Even reliable tenants can make mistakes and cause you financial headaches.

The simple truth is, landlord insurance is one of the factors that could make or break the financial success of your property investment.

It offers financial protection against unexpected events and allows you to safeguard your rental income. Plus, the potential tax benefits make it a smart choice for property owners.

At DCK Real Estate, our team can guide you through all the property management essentials, from investing to finding the best tenants and managing your property. 

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