Landlord insurance: What you need to know!
If the unthinkable was to happen to your investment property would you have the right insurance cover? Most insurance companies in New Zealand have a policy in place that cover rentals many call it landlord insurance. This type of insurance policy is designed specifically for landlords and usually replaces the need for home and content insurance on rentals.
If you’re new to being a landlord or never heard of it before then it’s worth looking into. We’ve put together a list of reasons why landlord insurance is important.
Accidental or malicious damage
Accidental damage to the property by the tenant can be a pain. If you don’t have the funds saved for times like this, then landlord insurance can cover the repair costs, although only up to a certain sum, but check that your policy does. If your property was deliberately damaged by the tenant, which does happen if you haven’t vetted them like a property manager does, this can also be covered. But depending on how badly damaged the property is it maybe several weeks or months before the property is rentable again and you will be missing out on rental income.
If your rental income is lost due to abandonment, eviction, accidental damage or in cases involving fire or floods and the property isn’t rentable for a period of time, then insurance can sometimes cover the cost of “loss of rent”. Some insurers cover the loss up to a certain amount, which normally is around $20,000 or 12 months. However, check that you are comfortable that this will cover you, $20k is only $770 per week for six months.
Over the past decade, methamphetamine has become a big issue for landlords in New Zealand. Some landlord insurance policies can cover meth contamination, however it can get a bit complicated and you’ll want to get some good advice around what it covers and your obligations. The contamination must first occur during the period of cover that you discover it, this is where insurance will normally cover the cost of repairs. If the contamination occurred before the current period of cover then there is normally no insurance cover. That’s why testing and recording levels is important for each tenancy transition. Inspections are normally required by insurance policies, so you should check yours and make sure you are compliant.
No two landlord insurance policies are the same, so it’s worth talking to an insurance adviser to make sure you’re getting the right cover needed for your investment property. If you’re still not sure this is right for you, get in touch and we can point you in the right direction.