The importance of insuring your rental property

1 min read

Owning a quality, well-located investment property is an excellent strategy for building long-term wealth. Taking out some ‘landlord insurance’ to protect your investment property could give you peace of mind, even if you never make an insurance claim.

Landlord insurance

Landlord insurance is a bit like the ‘home and contents’ policy you probably have in place to protect your own home. It covers accidental loss or damage to the building and its contents – although be sure to check the fine print to see what is actually covered.

In addition to a standard building and contents policy, landlord insurance can generally cover financial losses caused by a tenant who causes malicious damage to your property or defaults on paying the rent. While there is a bond to cover this, it is usually the equivalent of 4 weeks rent. If a tenant defaults owing 8 weeks rent, landlord insurance could help you avoid taking a financial hit (this will be subject to the terms of the policy).

Landlord insurance can also cover floods and bushfires, although the level of natural disaster cover will vary from insurer to insurer.

It’s also worth noting that the cost of landlord insurance may be tax deductible, which will help ease the cost of paying for this insurance.

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This information is current as at 15/08/2016.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice.

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