Landlord Insurance

Insurance is not a new concept; on average each Australian has one form of insurance policy in place to protect their asset or their health. Typically, the average adult would have knowledge or hold a policy for their vehicle, health or property contents.

As of the 31st of March 2022, Australia has a number of 92 insurers who provide cover to their customers. With a wide range of policy covers to choose from, each with its own level of protection tailored to the client’s needs. Organising insurance has never been easier, with comparison websites such as Compare the Market, Finder and CHOICE readily available it must come as no surprise to know that the industry culminated a total of $1.3bn in profits after tax (year ended 31st of March 2022).

As a property manager, it is essential to grasp the importance of insurance and the huge benefits a policy can have on the protection of a landlord’s assets. Landlord insurance has become the safety net for many landlords, from basic cover to a more premium cover with added extras and benefits tailored to the coverage of rental properties and rental income.

Having a detailed understanding of how landlord insurance works and the processes involved will better prepare you for making a claim as well as provide your landlord peace of mind. It’s important to note that landlord insurance differs from building insurance, each with their own specified cover which protects the asset as well as the income associated with the asset.

Popular insurers include Terri Scheer, Allianz and NRMA; each insurer provides varying cover based on the type of asset.

If your landlord is on the fence about taking out cover, provide them with some detailed information on what’s covered, here is a short list that I believe is a great selling point:

  • Absconding tenant
  • Defaulting tenant
  • Failure to give vacant possession
  • Death of a tenant
  • Hardship
  • Untenantable property
  • Prevention of access
  • Rent reduction

Storytime:

During Covid, one of my tenants had been let go of her job and adding salt to the wound, was also unable to attend university classes. Unfortunately, this individual had then decided to leave the country and return home overseas, this left the property vacant and with no income for several months. Furthermore, the property was in an abandoned state with all the tenant’s furniture and belongings left on the property. As the tenant was in contact with my office and small amounts of funds were paid for rent, we were unable to claim abandonment of property.

As my landlord was covered by landlord insurance, I was able to claim loss of rent, failure to give vacant possession (once TN was issued for Non-Payment of Rent – Arrears) as well as the costs associated with removal of tenant’s belongings and the changing of locks and keys since the tenants set was never returned. My landlord was then able to claim any damages and cleaning required, in sense the property was refreshed and ready to house a new tenant bearing no additional cost to my landlord. Needless to say, my landlord was ecstatic with their cover and protection; providing our landlords with a safety net not only benefits the investment component of our management but also provides us, property managers, with confidence should any unexpected issues arise.

References

https://www.apra.gov.au/sites/default/files/2022-05/Quarterly%20general%20insurance%20performance%20statistics%20-%20highlights%20March%202022.pdf

https://www.terrischeer.com.au/landlord-insurance/

 

Ahmad Darwich