Landlords should take out insurance on their rental property to cover against any damage and prepare for a range of possible scenarios.
While you enter an agreement with tenants in the hope that they’ll take perfect care of your property, accidents can happen and you can never be certain that they’ll treat it as well as you would. Some assume that a standard homeowner’s insurance will cover them, only to find that they’re not fully covered when the worst happens.
Landlord’s insurance is a vital part of owning a rental property. Cover yourself and you’ll have peace of mind — a good insurance policy will free you up from any worry about paying for damage or recovering lost rent, whether it’s through unruly tenants, accidents or other unfortunate incidents.
We suggest including the following policies in your landlord’s insurance:
- Damage caused by natural disaster or elements like fire or flooding
- Accidental and malicious acts by tenants
- Legal liability if a tenant or visitor injures themselves at your property
- Loss of rental income if your property becomes temporarily uninhabitable.
- Guaranteed income in case a tenant doesn’t pay rent.
- Legal costs in chasing unpaid rent.
There are additional considerations regarding insurance, too. Some insurers require landlords to prove they completed a thorough tenancy selection process before honouring damage claims and that regular inspections have been taking place to monitor the condition of the rental. Property managers can take these tasks off your hands, but you still need to make sure you’re clear about the requirements before taking out the policy.
Another consideration is that, under the Residential Tenancies Act, landlords are required to pay the premiums for this insurance themselves. Talk to your accountant and be sure to include this cost in your financial planning prior to buying the property.
Landlord’s insurance tends to be more expensive than homeowner’s insurance due to this type of property being more prone to damage. Be sure to shop around and ask your property manager for recommendations: we’ve helped many landlords take out policies to protect their assets.