Most property owners will generally own either domestic properties such as homes, units or apartments and commercial properties ranging from office buildings, retail shops, factories, warehousing and manufacturing.
The first and most important thing for any landlord is to ensure they control the insurance of their asset. Do not ask the tenant to arrange the insurance for you. If you control the insurance, you know exactly the details of cover you have chosen, you know when it is paid and you do not run the risk of having an uninsured property in the event the tenant leaves the premise without paying or if the tenant simply forgets to renew it.
From experience, we have witnessed several occasions where a loss has occurred after a landlord policy had been allowed to lapse without the landlords knowledge, leaving the landlord with a loss that he or she may never recover from.
Landlord Domestic Insurance
Similar to a House Insurance Policy (refer Home and Contents Insurance), the Landlord policies available in the market may be either a Defined Events or Accidental Damage cover with a few additional benefits to protect the interest of the landlord.
The main component in the landlord product is that the policy extends to cover loss or damage caused by the tenant or their visitors to the landlords building, fixtures and fittings or contents.
However, it is important to note not all damage is covered. Damage that is deliberate, intentional or malicious is covered. Damage that is due to tenant neglect, carelessness, and poor house keeping or unhygienic living habits is not. Damage caused by the tenant’s pets is also not covered.
Other benefits include “Loss of Rent Cover”. If the building suffers loss or damage and becomes uninhabitable as a result, the insurer will cover the loss of rent as stated in your rental agreement for a maximum period of 12 months or once the property becomes habitable whichever occurs first.
Another option which some customers choose at an additional cost for peace of mind is “rent default and theft by tenant” cover (some insurers provide the theft cover automatically). With this option, if the tenant leaves your rental property before the end of the tenancy period of the rental agreement without giving notice or the tenant is legally evicted from your rental property the insurer will provide some coverage. Most insurers will cover the rent default for either a maximum set dollar limit (e.g. $5,000) or maximum number of weeks (e.g. for 12- 15 weeks).
You must always remember that insurers when settling any claim under this type of policy will use any bond money that you are entitled to use to pay or reduce the cost of any loss or damage.
Liability cover for the landlord is automatically provided.
What happens if you have an apartment or a unit?
In almost all situations the building will generally be insured by the body corporate and so will the liability for common areas.
If you are a landlord you still should insure any contents or fixtures and fittings you have inside your apartment and your liability as a landlord.
You will need to ascertain with the body corporate whether loss of rent is covered and if it is adequate for the complex or whether you need to insure your apartment or unit.
Commercial Landlord Cover
As with any building insurance, it is important to ensure the sums insured you have elected as a landlord are adequate replacement.
You need to consider insurance for your property under the following sections.
Fire and Perils
This section will cover your business property such as buildings and/or contents against fire or other perils such as water and storm damage, malicious damage, accidental damage, lightning and explosion which may cause damage to the business property. It also provides automatic cover for removal of debris in case of a loss. Check to ensure the automatic removal of debris limit provided by the insurer is adequate for your situation.
This section covers your loss of rent.
Most insurers will offer you 12 months loss of rent cover. However, depending on the size of your building, the location of the building and whether the loss occurs in a time of a major peril such as a storm or bush fire where their may be a shortage of resources to help you rebuild quickly, you may need to consider 18 or even 24 months loss of rent cover.
The concern for most landlords tends to be the external glass on a building as it is generally the most expensive. Some landlords allow the tenant under the lease agreement to insure the glass. This allows the tenant to also cover any signage they may have put on the glass (e.g. retail shops) and insure under the same section all internal glass which the landlord may have or the tenant may bring with them as part of their tenancy.
Property Owners Liability
We receive calls asking us why do I need liability as a landlord when my tenant who is running their business from my premise has liability insurance? Simply, the tenant takes liability insurance cover for the business activities of that business. It does not cover the landlord for his liability as an owner of the premise. As an owner you may fail in your duty of care and be held liable. Assume a sheet of metal from your roof becomes loose on a windy day and hits a third party, you may find depending on the circumstances this is something you as a landlord will have to be responsible for and not the tenant.
How much cover do I need?
This depends on a number of factors such as the type of commercial property, recent court cases etc. but as a minimum starting point, we recommend no one should insure below $10,000,000.
If your building is part of commercial body corporate insurance, you may wish to review the loss of rent and property owners liability cover in relation to your unit.
This section covers sudden and unforseen loss to your plant and machinery.
You may wish to consider this cover where you have large machinery such as air conditioning units on office buildings, manufacturing, factories and warehousing.
How do we add value as your Insurance Broker?
With years of insurance experience both working with insurers and as brokers, our staff have the experience required in this market to provide you with the right advice. Most of us are property owners and are aware of the exposures you will face.Contact Us