As a landlord your property investment is key to your financial portfolio. Ensuring your investment is protected, could take many shapes. Here are a few suggestions from a Baxton Property Management on what is needed, and what is excessive.
Insurance may be a few hundred dollars a year, but could save you thousands. Choose your cover wisely, and by all means shop around and negotiate your payment, as well as your cover. If you have insurance on your home, life or car, you might get a discount on your investment property insurance if you stick to the same insurance company.
The right cover is crucial and so is the right amount of cover. Make sure you are not under or over insured. And remember to review your insurance every few years.
What should be covered?
- Damage caused by fire, storms or floods: There’s no reason to run for the hills or leave the island, but Natural disasters do happen in Tasmania as they do anywhere else. It’s therefore best for you to take out cover against these devastating events. Last year’s Tasmanian State Natural Disaster Risk Assessment reported that this Australian island state was vulnerable to heatwaves and coastal inundation (or flooding of coastal areas), as a result of climate change resulting in the risk of storms, floods and bushfires.
- Loss of rental income: Even with the most careful screening, it’s impossible to foresee the future. Not even the tenants know for sure what will happen during their lease period. Life happens, and properties get abandoned, not because the tenant planned it. Marriages break up, jobs are lost, or a tenant could pass away. The bond will cover the first four weeks, but it might take longer than that to re-let the property, especially if renovations or repairs are needed. Check that this part of your cover includes rent from day one, plus the costs of re-letting the property like advertising and letting fees and repairs for any damage done.
- Theft is another unpredictable factor, and one you can’t avoid completely. Even with top security measures, such as those a property management company may arrange on your behalf, the chance is always there that theft might occur.
- Liability insurance: Liability insurance is important and is usually included in landlord insurance packages to protect you from lawsuits due to negligence. It could be taken out on the property, or could be included in your business insurance. The last thing any landlord wants is a large claim against them. It could be devastating to your investment career and wipe out your life’s savings, so rather take out cover to protect you. Umbrella insurance typically includes liability cover over and above the liability included in general landlord policies.
Insurance on your building
It’s all very well to carry good insurance that might cover the “if’s” and the “maybe’s” of natural or other events. But what about the property itself? It is, after all, at the very core of your investment. Be sure to get the right cover for the building itself. It should include cover for cables and pipes, fitted appliances, features and fittings, awnings or exterior blinds as well as the gas or plumbing system.
Make sure it also includes damage caused by tenants, and check to what extent it does so. When it comes to damage to content, carpets, loose lamps and other unfixed features are usually not automatically considered part of the building insurance. You may need to consider asking your insurance company to include them in the package.
Why it’s vital to have landlord insurance
Baxton Property Management Company considers it vital that investors protect themselves against loss of rental income. If fact Baxton takes it so seriously, it has decided not to take on managing properties that are not insured for loss of rental income. That’s because, with more than a 100 years collective experience in taking care of properties and tenants, it has seen how a disaster or crisis can destroy investors’ properties, their careers, and, sometimes, their lives.
Speak to your broker, or feel free to get advice by visiting Baxton on-line or giving them a buzz.
Written and syndicated by
– Baxton Media.
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