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What Kind Of Insurance Should I Have As A Landlord

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Most insurers package together ‘landlord insurance’ – a suite of coverage reflecting how costly damage to a rental property can come from many angles.

Typical products within a Landlord Insurance package are:

  • Comprehensive House Insurance
  • Loss of Rent – following property damage
  • Loss of Rent – Other
  • damage to tenants’ contents up to $20,000.
  • Landlords Contents
  • Major Malicious Damage
  • Fire & Explosion
  • Deliberate Damage by Tenant
  • Retaining Walls
  • Meth Contamination
  • Natural Disaster
  • Recreational Features (specifically pools and tennis courts)
  • Owners Legal Liability – this tends to have the highest level of insurance, at up to $2m coverage with many policies, and includes coverage over Bodily Injury and Defence Costs

Initio is an example of a broker which claims to have paid out on the following:

  • When a tenant’s dog was locked in the property, it badly damaged the doors, walls and carpets. The insurer paid out.
  • A leaking tap connection wrecked the bathroom vanity and the floor, made of absorbant particleboard. A claim for Hidden gradual damage was accepted.
  • An overloaded electrical multiplug caused a fire in the laundry. The property couldn’t be tenanted after the fire service attended, leading to a loss of rental income- but Fire service attended. Repair costs and loss of rent was covered.
  • Police raiding a meth lab caused damage, but this was paid for by the insurer (note meth coverage may be a distinct separate requirement).
  • Damaged to foundations caused by an earthquake weren’t wholly covered by EQC so the private insurer paid a portion.
  • When a fence was blown over in a storm, the insurer paid for a replacement.

But wait! It’s hard to get coverage on the following, based on the following examples where the same broker, Initio, couldn’t pay out:

  • If the tenant doesn’t let anyone know the floor was squishy due to a leaking shower tray, the claim couldn’t or wouldn’t be paid. The reason is in this case the damage had to be from a PIPE, not the shower tray.
  • If rot occurs in wooden window sills rot which need to be replaced, it may be deemed a maintenance cost and the insurer may see it as ordinary wear and tear.
  • If tenants leave a house with large amounts of rubbish to be disposed of, no damage may have occurred, therefore no payout. Carefully read your insurance policy to see if only physical damage or loss are covered.