As a landlord, insurance is essential and your property shouldn’t operate as a rental without it. ‘Landlord insurance’ covers ‘sudden and accidental damage’ to your property, both things that occur out of your control. When you think of insurance, you might think there’s lots of paperwork and fine print. It’s not as complicated as you might assume, and it’s important that you’re aware of what your insurance policy covers. We’ve consulted with our Copo Wellington Property Managers and have gathered some answers to your questions about all things insurance.
What exactly is Landlord Insurance?
Landlord insurance refers to protecting you from the risks of renting your property, including gradual damage, deliberate damage, liability protection and loss of rent. Issues caused by a leaking pipe is considered gradual damage, and intentional destruction of your property by your tenants and their guests is deliberate damage. Liability protection covers your legal liability if there’s an accident at your rental property that has caused damage to someone else’s property. Loss of rent refers to if your property can’t be rented due to loss or damage covered under the policy.
What’s the difference between landlord insurance and house insurance?
When comparing insurance policies, checking the wording is incredibly important. House insurance doesn’t protect you from the above landlord-specific risks that are associated with rental properties. Some landlord policies may also include a limited amount of contents cover for things such as whiteware, blinds and flooring.
Is the insurance policy included in the tenancy agreement?
Yes – there is no tenancy agreement without an insurance policy statement. Where your property is insured, A tenancy will not commence without the new tenants knowing the insurance policy information, including the cost of the excess. If a tenant asks to see the policy wording in full detail, it must be given to them.
Who is the primary contact for the insurance company — the landlord or the property manager?
The landlord. The primary contact should always be the owner of the policy as there are often specific questions that a property manager cannot answer – for example, “has the owner made any kind of insurance claims in the last five years?”. When a claim needs to be made, the property manager can be asked to collate all the relevant information and liaise with the tenants, and insurance company after a claim has been lodged by the owner.
How are tenants held liable for damage?
Any claim against a tenant for damage to a property which was caused during their tenancy is capped at either four weeks rent, or the insurance excess of the owners’ policy. Whichever is lowest.
Are regular inspections a requirement of an insurance policy?
Yes. When you make an insurance claim, you must prove that landlord obligations have been met — including regular internal and external inspections, tenant checks, tenant references, signed tenancy agreements and bond payment. If these obligations haven’t been met, it’s possible that your insurance company will deny your claim. Working with a property manager is an easy way to ensure that all your landlord obligations have been met — this is just a regular part of the process for us when managing a property!
So regular inspections are needed for an insurance policy, but what if inspections can’t be carried out due to COVID-19?
The safety of both our tenants and property managers is our priority, so if a tenant is unwell, the property inspection is immediately delayed. We do not require proof that a tenant is sick; we simply reschedule the inspection date once they have recovered. The insurance brokers and companies that Copo has dealt with have all said the same thing — as long as inspections are carried out as soon as it is practical to do so, then it will not affect the owner’s insurance policy claim at the time.
Having a property manager is the best way to ensure you are meeting all the requirements for your landlord insurance. At Copo, we provide the accountability you need and take all the practical work off your hands — you’ll be meeting your landlord obligations without doing anything at all. To find out more about having Copo manage your property, get in touch.