Property Investors Insurance

The idea of insurance is to transfer to someone else the risk you can’t afford to carry yourself. This becomes quite critical if you are highly-geared in an investment property and cannot afford unexpected expenses arising from a bad tenancy.

So what can you expect from a landlord’s protection insurance? Firstly, have a good look at what you are getting. Damage in some policies means malicious damage (there must be malice in the act by the tenant). In others, its deliberate acts (wider than malicious) and some give accidental damage (wider still).

But having a claim that qualifies and getting it all paid are not the same things at all. Take accidental damage for example. Every landlord’s policy issued in Australia that gives accidental damage has a substantial excess (about $350 per event or more). The problem is that each item of damage is, if it’s an accident, a separate event. So your excess is going to be (say) $350 for each mark or chip. So, multiple marks on a wall or carpet may attract multiple excesses. That can quickly wipe out the cost of painting a wall or replacing a carpet. You can end up with a “Claytons” cover.

Other policies, which give deliberate damage for example, are frequently excess-free. Some items of damage will qualify as both accidental and deliberate under different policies.

So when you are looking at the options, look at the mix of cover and excess. That way, you will know what to expect from your insurer and what you will have to pay for yourself. Don’t get a rude shock!