EOFY… beloved by office supply stores, charities and accountants. Not so much by the rest of us, as we gather all of our paperwork to hand over to our tax agents. But, while all those documents are to hand, it’s the perfect time to review your landlord insurance cover.
It’s always wise to periodically review your landlord insurance policy – if you ‘set and forget’ you may find your cover is not right when you need to make a claim. Many people review when their policy comes up for renewal. But, as landlord insurance premiums are generally tax deductible, you’ll no doubt have your policy out now, as you prepare your return, making this a great time to check out your cover.
Here are five things to think about when reviewing your landlord protection:
1. Lease arrangement – has the way you rent your property changed?
- Have you switched from a fixed-term lease to the short-term market (corporate leasing, serviced apartment, holiday let or share accommodation platform like Airbnb)? There are different insurance policies to suit the different lease arrangements (as they pose different risks) and it’s important to have the right one in place.
- Are you now offering a fully-furnished property? Loose contents cover may be required.
- Has the amount of rent you are charging substantially changed? There is a limit to the amount payable for rental losses. At EBM RentCover it is capped at $1,500 per week (although you can cover more rent per week at a higher premium).
- Is the property still being rented? If you are no longer offering the property as a rental (for example, you have moved in or are letting family/friends use the home rent-free), you may need home and contents insurance instead of landlord cover.
2. Occupancy – has the tenancy arrangement changed?
- Is the property now being used for share housing or student accommodation? Multiple lease agreements on the one property may impact insurance cover.
- Have you allowed your tenant to sub-let? Sub-letting is generally excluded from landlord insurance cover.
- Is the property vacant? Rentals that are vacant for extended periods may no longer be covered by insurance.
- Have you allowed your tenant to operate a business from the premises? Having a business operate from the property comes with a unique set of complications. This means a landlord insurance policy may not be enough, or the right type, of cover and an alternate policy may be required.
3. Replacement costs – what would it cost to re-build your property today?
- To the same standard of finish and with the same features? Older properties are likely to have been constructed out of hard woods and have decorative features, like lead-lighting or wrought-iron work, that are expensive to replace.
- To current building standards? These have changed substantially in the past 10 years with requirements for natural disaster resilience, such as bushfire ratings and flood mitigation measures, which has meant the costs have escalated.
4. Capital improvements – has the value of the property changed?
- Has the property been renovated, altered, modified or extended? Any capital works may have increased (or potentially decreased) the value of the property. If this is the case, your landlord insurance provider needs to know so you can make sure you have enough cover.
- Have fittings or fixtures been upgraded or replaced? The replacement cost needs to be factored in to your sum insured.
- Have security measures been implemented (for example, deadlocks or alarm system installation)? Increased security may have a positive effect on your premium.
5. Contents – what would it cost to replace the contents in the rental?
- Have you upgraded, replaced or added additional contents (these are items owned by you and not your tenant)? The current replacement cost needs to be calculated to ensure you have enough contents coverage.
- Are there any high-value or specialised contents at the property? These items may need to be specified on the insurance schedule or even require a separate policy.
The answers to these questions will help determine if you have the right type of policy in place and if the sum insured (building and contents) is adequate.
At EBM RentCover we educate clients about the different types of insurance so they can make an informed decision about the insurance for their property. If you need help finding cover, contact the EBM RentCover Expert Care team on 1800 661 662.