Landlord insurance is vital for every property investor. Just like building insurance covers you for the unexpected, landlord insurance also covers you against unexpected loss like rent default and malicious damage. However not every landlord insurance policy available performs the same way and in fact there can be several pitfalls you need to be aware of.
Tip One- Top Tips for Avoiding Landlord Insurance Pitfalls
Building Insurance is not Landlord Insurance! Some investors believe that building insurance also includes landlord insurance. Standard building insurance will cover you for fire and storm damage etc, however will not cover you for losses relating to a tenancy like rent default and malicious damage caused by the tenant. Comprehensive landlord insurance must be implemented separately to ensure you are covered for tenancy related risks.
Tip Two- Top Tips for Avoiding Landlord Insurance Pitfalls
Beware Bank Landlord Insurance- when you take out your loan with the bank, no doubt they will also offer you building and landlord insurance cover. Be aware that policies sourced through financial institutions can contain large rent default excesses not found in landlord insurance policies sourced through property management agencies. Restrictive clauses can also result in your claim denied, which may have been otherwise covered by landlord insurance sourced with your property manager.
Tip Three- Top Tips for Avoiding Landlord Insurance Pitfalls
Don’t Delay Serving Legal Notices- if you are managing the tenancy yourself, never delay the serving of your legal notices when a tenant falls behind in rental payments. If you have submitted a claim for rent default and it is found that the process has been delayed or compromised, this will affect your claim and possibly result in it being denied!
Tip Four- Top Tips on Avoiding Landlord Insurance Pitfalls
Always Take the Maximum Bond- never compromise and ensure you always take a maximum bond. Some landlords choose not to take a full bond, and some even choose not to take a bond at all! It is important to know that choosing not to take a full bond can result in a landlord insurance claim being compromised or possibly denied! Therefore ensuring the correct bond is charged is a must!