Why Landlord Insurance Is Essential
Landlord insurance is a must-have for property investors looking to protect their investments. While many landlords purchase insurance believing it will shield them from all potential risks, issues can still arise if they don’t fully understand their policy or its coverage. Therefore, knowing what to look for—and what to avoid—is critical when selecting the right policy.
10 Common Landlord Insurance Pitfalls
o help you make an informed decision, here are 10 pitfalls to watch out for when purchasing landlord insurance and how to avoid expensive mistakes:
Buying a Policy Based on Price Alone
While saving money is important, cheaper policies often lack essential coverage. Consequently, it’s better to focus on finding policies that provide value rather than simply opting for the cheapest option.
Exclusion of Deliberate Fire by Tenants
Surprisingly, some policies do not cover damage caused by tenants setting deliberate fires. Although this event is unusual, it’s recommended to always review the fine print to ensure this is included in your landlord insurance and how to avoid expensive mistakes.
Understanding Excess Amounts
Additionally, you should be aware of the excess amount you’ll need to pay in the event of a claim. Check whether the tenant’s bond can be used to cover this expense.
Underinsurance
Another common issue is underinsurance. Be sure to insure the property for its full replacement value, rather than a reduced amount just to save on premiums.
Malicious Damage by Tenants
Similarly, you should confirm that your policy includes coverage for malicious damage caused by tenants, as not all policies do!
Limited Coverage for Accidental Damage
Furthermore, some policies restrict accidental damage coverage to contents only, leaving the building exposed. It’s essential to clarify what is covered before signing up.
Inadequate Combined Policies
Combined home and landlord insurance policies can seem convenient, but they often fall short in providing adequate landlord-specific protection. Be aware of this when selecting your combined policy and if necessary, you may need to explore dedicated landlord insurance options.
Relying on Body Corporate Insurance
While Body Corporate insurance typically covers the building structure, it doesn’t provide liability coverage for injuries inside your property. Therefore, you’ll need separate landlord insurance for full protection.
Claims Denied for Periodic Tenancies
Another pitfall is that some insurers won’t pay claims if the fixed-term lease has expired and transitioned to a periodic tenancy. This is an important clarification to make with your insurer.
Thinking You Don’t Need Insurance
Finally, some landlords believe they don’t need insurance if they have reliable tenants and a great property manager. This is simply not the case! Insurance is essential to protect against unforeseen events, such as accidental or malicious damage, or natural disasters.
Protect Your Investment
For a more in-depth look at landlord insurance, including what it covers and why it’s essential for protecting your investment, check out this comprehensive guide published by Realestate.com – What is landlord insurance and what does it cover?
Plus, for more insights and practical advice, watch our video click here.
In conclusion, taking the time to review your landlord insurance policy and understanding exactly what it covers is essential for avoiding costly mistakes. Don’t let these common pitfalls jeopardize your investment.
