As a landlord, you may feel like your investment involves constantly rolling the dice. When taking in new tenants, a screening process will only go so far in ensuring the right people apply and are ultimately allowed to live in your property.
While real estate agents and managing agents may do their best to get respectful and conscientious people occupying your property, it simply is not always possible to do so with 100 per cent surety.
Even when you do find the right people to live in your property, your land will be susceptible to near-constant risks. Prevention is often better than the cure, but against such unfavourable odds, many will rely on their insurance should worst come to worst.
Some of these risks can be planned for better than others, some are even preventable, but for the ones that aren’t, it’s important to avoid the gamble.
You may have heard that there’s no such thing as a perfect tenant, but there are certainly plenty of bad ones.
While a landlord will no doubt be proud of their property, and will have put the time and effort into making it a habitable and enjoyable space, that is not always transferred to the occupant.
Even the good tenants may not offer the income security you may hope for. In fact, there are a whole host of unpredictable risks in retaining even the most ideal occupant – if they lose their job, get divorced or become separated, for example.
Rental income protection can secure a landlord’s finances against loss of rent due to an insurable event that renders the building unrentable (storm damage, fire ,etc.).
Yet the latest study from BDRC Jones Donald found that almost one-fifth (19 per cent) of landlords whose property is professionally managed and nearly half (46 per cent) of self-managed ones are not covered by landlord insurance.
Landlord property insurance
Rented property, like any other, is open to the environment. Depending on location, there are various risks that threaten the physical property, such as the flooding, fires and storms prevalent across Australia.
You may only have to look at the recent damage caused by the Brisbane storms in late November to realise the risks, with more than $1 billion of damages inflicted upon homes and businesses. What’s more, it appears that the storm-prone city will be braced for more of the same over the coming weeks.
With much of its metropolitan areas lying in coastal regions, many parts of Australia are in the same position as the Queensland capital – liable to be hit by adverse weather at relatively short notice. Inland areas, too, are hardly more protected, with bushfire season striking many regions.
This puts a greater weight of responsibility on a landlord’s property protection. Landlords who own multiple residences tend to do so in the same area. Whereas storm damage to one property may prove costly, damage to more than one can really hit the revenue of a business, as well as its ability to continue creating a sustainable income.
A landlord will not want to be sunk by such unfortunate circumstances, so having the right level of insurance protection to mitigate against likely risks is the strongest form of defence.
Protecting your business
Landlords who wish to protect themselves and their business will find there are many options open to them in terms of insurance.
Finding landlord insurance that suits and protects your business will come down to factors such as location, construction, security & value.
As we head into 2015, take some time to discuss your needs and what risks your business faces with your insurance broker.