Friday, June 08, 2012

Landlord insurance…YES YOU NEED IT!

Landlord insurance…YES YOU NEED IT!
Whether you have one property or thirty properties it is vitally important that you have landlord insurance from the get go. Landlord insurance policies can provide cover for things that your standard building and contents insurance do not usually cover.
Items that landlord insurance may cover include:
  • Malicious or intentional damage to the property by the tenant or their guests
  • Theft by the tenant or their guests
  • Loss of rent if the tenant defaults on their payments
  • Liability, including for a claim against you by the tenant, and
  • Legal expenses incurred in taking action against a tenant.
It is never intentional to select a tenant who doesn’t take care of your property or won’t pay rent for what ever circumstance. However covering yourself in case a situation does arise will benefit you in the long run. There is comfort in having a protection on your property should anything happen with the tenant.
“A survey conducted by Woolcott Research of 300 landlords showed that two out of five self-managing landlords interviewed had experienced tenants defaulting on rent or damaging their property. That's why it's important to take out landlord-specific insurance.” (G Bullock)
“Leanne Stagnitta, national home products manager with NRMA Insurance, says that according to the Woolcott study, less than half of all self-managing landlords have specific landlord insurance, even though three out of five recognise a bond is not sufficient to cover most incidents with tenants. "These landlords are trying to save costs on agent fees and insurance, but in the process they are putting their valuable assets at risk," says Stagnitta.

There are a range of companies that provide landlord insurance, not every policy is the same so ensure to find out exactly what they cover for your particular situation and do some research to find the best price. Two of the bigger landlord insurance companies in South Australia are Terri Scheer and Property Insurance Plus.

Other research has found that landlords who used real estate agents to manage their relationship with tenants were likely to face fewer problems than those who self managed. This was due to not having the expertise or procedures in place that a typical real estate company would use such as having rental agreements, thorough screening of applicants including rental histories and performing regular inspections of the property.

So essentially if you are serious about protecting your most important asset ensure you have landlord insurance or go the step further and use a property Management Company to cover all bases before you start.

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