For the most part, owning an investment property is a very rewarding experience, and can be valuable in creating an additional income stream and building wealth. But as with any investment, it is important to understand that there are risks involved, and there are steps you can take which will reduce the risk, and lessen the impact should the unfortunate occur.
One of those steps is to align yourself with a quality Property Management agency who is experienced in selecting quality tenants, and handling the management of your property with ease and professionalism.
Despite our very best efforts, sometimes a circumstance or situation may occur that we cannot foresee, or sometimes even fall outside of the tenant’s control. The tenant may get ill, or lose their job, and may be forced to break their lease early. For these situations, you can reduce the overall financial loss and stress by making sure you have selected an insurance policy which is suitable for an investment property, and includes adequate cover for a wide range of circumstances.
As with any product or service that you purchase, there can be a large variance between what is offered, and cheaper is not always better. What might save you a few dollars in the short term can cost you a lot more in the long term.
We encourage all landlords to take out landlord insurance, but choosing the right one for you can be tricky. Make sure when you are choosing an insurance policy, you are looking at what is included in the policy and limits to coverage, as well as the excess amount for claims, and the claims procedures.
For example, some insurers won’t pay the first four weeks of a rent loss claim, as they consider this to be covered by the bond. Unfortunately, in most cases where there is a claim, there are also quite often additional costs such as cleaning, gardening, outstanding utility bills etc. If you have chosen a policy like this, should a claim occur, you will have to foot the bill for these costs yourself, which reach into the thousands of dollars in some cases.
Even for damage, there are policies with excesses as high as $1000 or 2000, which can make claiming for damage to the property pointless.
It’s also important to note that usually insurance premiums for your investment property are tax deductible, so check with your accountant at tax time to see if it can be included in your tax return.
If you don’t have a current landlord policy in place this may be a good time to consider whether you can really afford not to have one in place if things didn’t go according to plan. If you are proactive and have an existing policy I strongly recommend reviewing the fine print and checking to see what you are covered for (or perhaps not covered for). Just remember, not all policies are created equal!
If you would like to receive some information about specialist landlord insurance policies available, please call me to discuss.
