When you buy a property for investment purposes, you leave yourself open to the risks that arise when the property is rented out to tenants. It is therefore pleasing to know that there are various types of insurance policies to protect investors.
The different insurance policies that are available for investors cover possible rental problems to varying degrees. Hence it is a worthwhile exercise for property investors to seriously research the different options available and consider how much money you are prepared to spend to protect your property.
This decision will usually depend on factors such as the type of property you own, the quality of tenants likely to be living in it and the area in which it is located.
The variety of situations that the different types of landlord insurance can cover include circumstances caused by your tenants that are out of your control. Your policy may cover you for:
Protection of your rental income, for example in the case of tenants leaving your property untenantable due to damage, or defaulting on payments.
Cover for the physical building and its contents, for example in the case of your tenants and/or their visitors causing malicious and accidental damage or stealing.
Your legal liability as a landlord in the case of, for example, the death or injury of a tenant.
Additional costs if your property related tax return is investigated and/or audited.
The options and conditions for landlord insurance policies vary considerably and you should ensure that you have fully read the product disclosure statement associated with the policy you decide upon. In some instances, insurance companies will only insure an investment property if it is managed by a professional property manager. Additionally, the exact cover of the policy may differ according to when it was taken out, and whether or not tenants had yet moved in.
For property owners with more than one property, some companies offer discounts when multiple insurance policies are combined – simply ask your insurance company when establishing a policy.
While the concept of insurance can be daunting, it is good to know that you can protect yourself from issues that may come about with your investment property which are beyond your control. By conducting research and talking to other property owners you should be well on the way to determining the best insurance policy for your investment property.