Owning an investment property can have its fair share of pros and cons. However, some of the complexities can also take their toll, such as unfavourable tenants and what feels like endless maintenance costs. Then, when you add the possibility of tenants maliciously damaging your property, the headache of the financial stress can be a lot to handle. Therefore, landlords should consider purchasing Landlord Insurance to help cover the cost if the unexpected happens. In this article, we look at Landlord Insurance in detail, what it covers, and how it’s different to Home Insurance.

Landlord Insurance is designed to cover you for risks generally faced by landlords. It is an enhanced form of home building insurance, including cover for storm and fire, but has additional standard features such as cover Rent Default, Loss of Rent and Damage by Tenants.

An investment property is one of the most significant purchases you’ll make throughout your life. But from the minute you hand over your keys to tenants, you become susceptible to the possibility of damage, and other mishaps occurring. If your property is damaged by a tenant, or an event such as a storm, the responsibility of repairing the damage sits with you, and sometimes, the cost of these repairs can easily creep into the thousands. Then there’s also the possibility of being held liable for injury or property damage if your tenants allege you were negligent as a landlord. Landlord Insurance is therefore a sensible cover to consider taking out if you own a rental property, to help mitigate financial hardship if you are subject to these types of events.

The Landlord Insurance arranged by Aon can help cover your property for damage as well as any loss of income you might sustain while the property is out of action. The standard cover included:

• Loss of rent
• Rent default
• Damage by tenants to contents
• Liability cover
• Flood
• Clean-up costs associated with illegal drug production
• Pet damage

Regular Home Insurance helps cover your property against damage from events such as storm, fire and theft and usually includes a section covering your liability as an occupier. It traditionally does not cover damage deliberately caused by you or someone who has entered the property with your permission. Therefore, if a tenant damages your property, this will usually not be covered by Home Insurance as you’ve allowed them into your rental property.

Landlord Insurance can help cover all the same events that standard Home Insurance covers, but has additional features which are relevant to landlords, such as Loss of Rental Income, Rent Default and Malicious Damage caused by Tenants. For example, say there was a severe storm which caused substantial damage to your rental property. Your tenants may not be able to live in the property while it is being repaired. Under a Landlord Insurance policy, you may be able to claim some of the rental income you lose during this period.

Rent Default is another feature which is only available under Landlord Insurance, and not regular Home Insurance. Remember though, it may not be a standard inclusion, so you may need to pay an additional premium.

The price of Landlord Insurance will vary based on several factors. Some of the factors considered include the location of the property; property type (for example, a house will have a different premium to an apartment); the sum insured; the cover options selected, and the excess.

Aon can arrange two types of Landlords Insurance policies designed to suit the risks commonly faced by landlords:

(1) Rental Protection Plus Advantage: The level of cover and price is fixed per state. Premiums can be found here - Rental Protection Plus Advantage page.

(2) Rental Protection Plus: This is a tailored insurance policy where you pay only for the cover you need including building insurance. Premiums vary depending on the cover and excess selected. We recommend going through the quote process to get an indication of the price for Rental Protection Plus Landlord Insurance.

Clients who do not require cover for the building, such as those who own a unit or any home under a body corporate, may wish to consider Rental Protection Plus Advantage. This protects you against Malicious damage by tenants, Loss of rent, Rent default, Theft by tenants, Contents cover, Liability cover, Flood, Clean-up costs associated with illegal drug production and Damage by pets. If this cover is not sufficient for you, or you require cover for the building, Aon can also arrange a customised Landlord Insurance policy, with flexible limits and cover options where you only pay for what you need.