While this might come as a surprise to many investment property owners out there, landlord insurance won’t cover you against every possible event or scenario. Standard policies will offer protection against:
- Water damage
- Vandalism and theft
- Lease break (when the tenants leave the premises before due date)
- Natural disasters
- Civil unrest and rioting.
You will likewise need to establish what your building cover will actually pay for. A buildings policy protects the structure of your property including:
- Fixed appliances (e.g. dishwashers, air conditioners)
- Gas or plumbing systems
- Fixtures and fittings (except for carpets, loose floor coverings, curtains and internal blinds)
- Exterior blinds and awnings
- Some external structures.
Building insurance will typically cover you for the complete or partial destruction of your property or the loss of rent while the property is unlivable. If your property is part of a residential unit block, the body corporate normally insures the fabric of the building, which means you have to rely on their insurance for structural damage.
Liability coverage protects you from legal responsibility in case of an unforeseen accident where a person sustains an injury at your rental property. For example, if your tenant or their guest slips or trips over on wet surface within your property boundaries and breaks an arm, you won’t have to pay their medical bills when you have liability cover.
You can also get additional contents only insurance against the loss, theft or damage of:
- Electrical appliances
- Additional furnishings, e.g. carpets, curtains, blinds.