Some Investors think because they have a Property Manager, they don’t need Landlords Insurance, however Landlord Insurance is one of the most important purchases an Investor can make.
What is Landlord Insurance? Landlord insurance covers you for tenant related risks, including loss of rental income, and loss or damage by tenants to your building or contents.
At any time, the tenant’s situation can change, they could lose their job, experience a marriage separation, the main income provider can’t work due to injury, death of a tenant, tenant abandons the property, tenant moves out and moves in their friends and they damage the property and the list goes on. These situations are out of the Property Managers control.
For example, 2x tenants have had a perfect 5 year tenancy, husband and wife split, husband move out and wife struggles to pay rent, tenant becomes 8 days in arrears, is given 7 days plus postage to rectify this. Wife fails to do so and is given 7 days to vacate plus postage. (as per legislative requirements) Wife cannot move out due to the children and costs etc and now owes nearly 3x weeks, the agent applies to court, the hearing is in 3x weeks, wife is still not paying rent, as she is saving for the new bond for the new property and also the cost of the move, the judge terminates the lease and gives the tenant 2 weeks to move out. Rent is now 8-9 weeks behind. The bond will be used for any cleaning, repairs, gardens, carpet cleaning etc before the rent. The owner is now out of pocket, any rent, further costs getting the property rented, court costs, etc, if the owner had Landlord Insurance, all these costs would be covered.
What happens if the tenant dies in your property? Depending on the cause of death, there are special guidelines Property Managers need to follow, and can be quite expensive, this is something that would be covered under your Landlord Insurance.
If you have an investment property, check with your current insurance provider, what you are covered for. Not all companies cover the same thing.
For a small annual fee, it will give you complete piece of mind, your most valuable asset is covered for all unforeseen and possible events.