The recent disasters of Queensland bring to light the topic of insurance. If a similar occurrence happened to your rental property would you be insured? Do you know what your insurance covers? These are important things to know before taking out a policy with an insurance company.
A common assumption amongst strata property owners is that the strata insurance will cover your property for damage that may occur. This can often lead to investment properties being under insured, while it is estimated that 70% of all households are under insured. Strata insurance will only cover common areas, meaning that if your property is flooded the strata may cover removing the water; however the owner would be responsible for rectifying any damage caused to the internal items including, carpets, repainting walls, replacement of furniture and also repairs to fixed items such as kitchens or bathroom vanities. This can be costly when you consider the damaged items need to also be removed and the property must be in a habitable condition before rent is received again.
Also while your property is being brought back to a habitable standard, you will not be receiving any rental income. A natural disaster can turn a great investment into a nightmare without the correct insurances.
There are companies which offer a landlord protection insurance policy however it is wise to read the policy details before deciding as there are often terms and conditions associated with the payout. For example: A tenant must not be in arrears for the first 4 weeks of the tenancy otherwise the policy is void, or the property must always be under a current residential tenancy agreement and not be relying on the month to month continuation clause.
Late premium payments can also attribute to a claim either being delayed or rejected as the above mentioned conditions can be reintroduced depending on the situation. If the policy lapses and the tenant is in arrears at that time, it could cause a claim for rental arrears to be denied. The easiest way is to have the premium taken directly from the rent by your property manager before the funds are transferred to your account at the end of the month.
Several companies offer landlord insurance as their core business with competitive premiums currently around a few hundred dollars per annum. It is worth while taking the time to find a specialist policy as they can save you time and money in the future when it counts.