This was the case with a couple of ‘toxic tenants’ from Western Australia, with a history of signing a lease and then working the system by staying at a property but not paying rent for months.
As long as the bond has been properly registered, landlord’s insurance should respond in this situation and cover the rent during the period of non-payment, although this is an optional cover. In fact, landlord’s insurance is advisable for anyone who has an interest in an investment property.
“For the policy to respond to a claim for rent default, there needs to be a proper lease in place”
“Landlord’s insurance provides cover if you own an investment property and you lease it out,” explains Michael White, Steadfast’s broker technical manager. It can cover the landlord if the tenant doesn't pay the rent and for malicious damage caused by tenants. It can also include liability cover in case the tenant is injured in the property.
Policies can provide cover for loss of rent if the apartment is damaged and becomes uninhabitable, for instance from, a fire. Landlord’s insurance differs from strata insurance, which covers the building.
For the policy to respond to a claim for rent default, there needs to be a proper lease in place, says White, who has seen a wide range of claims against landlord’s insurance policies.
In one case, damage was caused to a leased property by a goat the tenants brought onto the premises. In another case, a tenant abandoned a property with 30 cats in it.
“To reduce the risk of claims, ensure the property is properly managed. This includes carrying out regular inspections. This is not a set-and-forget asset – it requires ongoing management,” he advises.
While landlord’s insurance is not compulsory, it’s an important risk management tool for anyone with an investment property to help protect its income stream and pay for any damage done by the tenant or as a result of another insurable event such as fire.
So talk to your Steadfast broker to ensure you have the right insurance in place so that in the event of a claim, you should be properly covered.
Important note - the information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)
Important notice - Steadfast Group Limited ABN 98 073 659 677 and Steadfast Network Brokers
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
Information is current as at the date the article is written as specified within it but is subject to change. Steadfast Group Ltd and Steadfast Network Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.