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Many people get landlord insurance mixed up with building insurance, but they’re actually two very different things.
While building insurance generally covers any damage to the structure of your property, landlord insurance is more related to loss of income, damage, or theft brought about by tenants. It’s important to note however, that you don’t necessarily need to purchase these as two separate policies. Meaning that you can purchase landlord insurance, which also covers the building.
Some of the typical things covered by landlord insurance include:
The short answer is, it depends. A number of things can go wrong with renting out a property, so you definitely want to make sure you’re covered. And while building insurance generally covers you for the structure of your property, what about all the bits and bobs you own inside?
Landlord insurance covers for damage to your permanent fittings and fixtures, such as carpets, blinds, appliances, light fittings etc. These contents are expensive to replace. Remember the Queensland and Victorian floods? Many of those investors didn’t have adequate insurance in place and faced immense clean-up and replacement costs.
And then of course you have the risk of a lost rent. Circumstances can change, and even the most reliable tenancy can hit financial problems.
The cost of landlord insurance varies greatly between states and even suburbs. Insurers will weigh up the risks to them when drawing up a quote, including the crime rate of the location and whether your property falls within a natural disaster risk zone.
The more expensive your policy, the greater the cost to your rental income. On the other hand, the cheapest policies don’t always provide the best value for money. What you want to consider is what’s included in the cover, and whether you’re insured for the major risks associated with your individual property.
And because your property is an investment expense, your policy premium is tax deductible – a win, win all round1.
The truth is, landlord insurance is one of the most important purchases you’ll make as an investor. But policies vary in what they cover and how much they cost. So, it pays to make sure you’re covered for the things that are most relevant to your property.
Some of the things you want to compare, include:
This is the amount you pay for the insurance. Premiums vary and often reflect the risks to the insurer and the likelihood of you making a claim.
If your excess is high, it could be the reason your premium is so competitive. The excess is the amount you pay towards a claim. The higher the excess, generally the lower the premium on your policy.
Consider the risks associated with your individual property and make sure you choose a policy that includes those risks. For example:
Make sure you understand the finer details of your policy. While you may be covered for loss of rent, for instance, there may be limitations on the amount you can claim or the period you can claim for.
Finding a suitable home & contents policy is easy with iSelect. Click here to view iSelect’s range of home & contents providers, and select the one which suits you.