Insurance For Property Investors
During tough financial times it is a fact that insurance is one item that people will cut back on when struggling to meet commitments so I thought I would like to just go over insurance from a property investor’s point of view and emphasise the importance of having property insurance and landlord insurance.
As a property purchaser you are probably aware and your agent should advise you to take out a cover on the property you have signed a contract on, right on the day of the contract being completed by both parties. This will cover the buildings should anything happen between the time of signing the contract and taking ownership. You just ring up and cancel it if you do not go ahead for some reason or other.
Whether you do or don’t have tenants in a property on the day of settlement that you are going to rent out, it is a good idea to set up your Landlord’s insurance to start on that day. If you do not have tenants in at the time let the insurance company know that it is vacant and advise them when tenants move in. Experienced property investors will tell you that it is advisable to keep your insurers informed at all times, in writing, regarding tenant vacancies because this is just another way to cover yourself so the insurance company cannot back out on that technicality, should there be a claim.
The following are typical of coverage from an insurance company but check with your insurer regarding their terms.
· Loss of Rent – provides security so you still have income from your property to meet your expenses
· Loss or damage - building – caused by tenants, families or invitees
· Loss or damage – contents – covers general household contents owned by the landlord which you are responsible for and that you provide for the use of the tenants
· Legal liability – covers legal liability for damage to other people’s property, or death or bodily injury to other people
· Tax audit - pays professional fees in relation to a taxation audit in relation to your rental property
You can see that these are quite different to the Property Insurance. If you carry a mortgage on the property it also pays to have income protection insurance because of the property burnt down it could be 18 months before you have tenants in there again.
Filed Under: Property Investment Tips
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