Do you need to have landlord’s insurance?

Do you need to have Landlord’s insurance? This is an important question to ask and an important conversation to have.

Reece Sammons on whether landlord’s insurance is necessary.

It’s not necessarily feasible for landlords in certain circumstances especially if they own a lot of properties. This is because continually paying lots of premiums will be more expensive than any out of pocket costs that can just come out of the excess rent. 

But if you’re a landlord who owns a small number of properties it is generally quite important for you to have landlord’s insurance in place. 

The first defence against any issues in the property caused by the tenants is of course the tenant’s Bond, but once the Bond is exhausted then that’s when landlord insurance kicks in.

It covers you as a landlord for anything that goes wrong above the tenant’s Bond. 

What is covered? 

1. Loss of rent
2. Property damage from storms
3. Damages from certain types of illegal activity

It is worth noting that landlord insurance will generally cover you for everything that home insurance covers and more, as it is specific to landlord needs. 

How much does it cost?

Of course landlord insurance ranges depending on the individual circumstances, but we have seen cases starting from as little as $350 to $380 per year. For most rental properties, a policy in this sort of range is an inexpensive solution to the range of potentially very expensive problems that can happen in a rental property. 

But what about my property manager? Don’t they protect my property and find me a good tenant? 

Arguably the best ‘landlord’s insurance’ is a property manager in many respects. At Sydney Listings, we take this perspective of our service particularly under our Contemporary Property Management model.

We take effort to screen tenants before securing them in our landlord’s properties. This is by conducting reference checks and gathering a wealth of supporting documents on an application. We also place an emphasis on pre, post and mid tenancy education of our tenants. Check out some of our videos here for instance to learn more. 

Conducting routine inspections is also vital to this process. But for anyone who knows people, knows that they are unpredictable. People change – in my experience I’ve seen tenants never be late in rent for years. Then suddenly everything changes and they fall behind following a change in circumstances!

I’ve seen perfect tenants turn and suddenly let things go at the end of a tenancy and present properties horribly when moving out. 

But why?

It’s a little thing called the human condition I’m afraid! Accountability goes away. Then people fall back to their own standards, rather than yours. We try everything we possible can to instil our high standards on to tenants for our landlord’s benefit. But it is impossible to do this completely, people remain too unpredictable. 

In my opinion the goal of Property Management is to reduce stress, reduce risk, and cover our fees so that we’re not really getting paid. We rather ‘take a commission’ from the money we save our landlords.  If we’re not doing that, then what is the point of having a property manager? You’re better of doing it yourself!

You may be someone who can’t withstand up to 2 months without receiving rent. Or settle a bill of more than $10,000 following storm damage. Then be aware that there are some things that a Property Manager or Contemporary Property Manager cannot protect you against! 

It is a good idea to understand how we’ve designed Contemporary Property Management to be a semi-landlord insurance policy by downloading this fact sheet. 

Who to use for landlord insurance?

Our official landlord insurance partner at time of writing is PI Plus who have a pretty strong commitment to protecting our landlords. But we are equally happy to discuss some other options who we don’t share a commercial relationship with. 

Terri Scheer for example position themselves as one of the forerunning brands in landlord insurance. If you have your own insurance broker, speak to them about what policies they can recommend as they will likely be the most aware of your individual needs.