updated 15th October 2016
Investors should look for the following key clauses in their landlord insurance policy to ensure they’re adequately covered:
1. Malicious damage by tenant
Malicious damage covers everything from holes punched in walls and doors that have been kicked in to intentional damage to carpets and floors.
2. Accidental damage
This covers unintentional damage to a property, such as the accidental breakage of a window or a red wine spill on a white carpet. Accidental damage may also cover damage caused by small children, but excludes gradual ‘wear and tear’ that has been sustained over time.
3. Legal liability
This covers expenses incurred if a lawsuit arises as a result of a tenant suffering bodily injury or property damage or loss, where the landlord is found responsible.
4. Loss of rental income
In instances where malicious damage has been caused to a property, there may be a loss of rental income while the property is repaired or cleaned. Loss of rental income can also result from absconding tenants, defaulting payments, death of a sole tenant, failure to give vacant possession or a court awarding a tenant a release from lease obligations due to hardship. Choosing a policy that covers these incidents will ensure the landlord continues to receive a steady flow of rental income.
5. Tax audits
Some landlord insurance policies now cover landlords for a certain level of professional fees relating to an investment property audit undertaken by the Australian Taxation Office.