The path to becoming the proud new owner of an investment property is rarely an easy one.
To buy an investment property, most Australians have to work hard, exercise extreme discipline and save money.
They economise, go without and display real dedication to achieving their goals.
But that sacrifice is usually worth it in the end, right? After all, that property should represent safety for the future and the income from rent could eventually set its owner up for life.
So, if you’ve just bought an an investment property, what would happen if, in the first week, your tenants spilled hair dye all over your brand new carpets and you needed to spend tens of thousands of dollars replacing them?
The safest way to protect an investment property is through landlord insurance. Picture: realestate.com.au/buy
And what if they then upped and left so that they don’t have to live through the work you now needed to do on the place you just bought?
You could be receiving zero rent in addition to having to pay for a massive unforeseen cost.
That’s on top of still having to meet your mortgage repayments.
Suddenly that investment doesn’t look so sound anymore, does it?
A common scenario for landlords
This isn’t a far-fetched or remote set of events.
In fact, it’s something insurance provider Youi sees all the time, and why they offer landlord insurance to investors.
Landlord insurance could protect a landlord from loss of rent, whether that’s through an insured event, or unsafe living situation.
It could also protect against damage tenants might cause to an investment property.
Landlord insurance protects against damage tenants might cause to an investment property. Picture: Getty
If you take up optional cover for tenant default, you could also be covered for any rent the tenant can’t or won’t pay.
And that could give you great value for money as well as peace of mind.
An even more common scenario for landlords…
Bad tenants causing damage or not paying rent may be a landlord’s greatest fear, there’s something far more likely to happen.
And that’s something landlord insurance covers too: Nature.
Youi research shows that a property investor is significantly more likely to suffer at the hands of a storm or flood than at the hands of a dodgy tenant.
Youi’s data also reveals that, over the past 12 months, storms and escaping water together have accounted for around 50% of all landlord insurance claims.
In fact, storms – which made up 29% of all claims just on their own – were more common than claims from fire, theft and electrical burnouts combined.
Make sure your home is covered for storms. Picture: Getty
The only good news? With an average claim amount of $27,015, storm claims are not usually the most costly insurance claims landlords make, at least not on average.
The dubious crown for most expensive landlord insurance claim goes, as you might expect, to fire.
When fire strikes an investment property, the average claim size is a whopping $399,378. And all it takes is a simple accident with a pot left on the stove…
Ask yourself, how would you pay for that without landlord insurance?
The claim after the storm for landlord insurance
If you own an investment property, landlord insurance can still help out, even after you’ve repaired damage or been compensated for the non-payment of rent.
For instance, Youi landlord insurance covers you for the cost of replacing the locks and keys, furnishings and even clean-up and professional costs.
It will also pay for up to $1,500 of counselling services.
In other words, insurance doesn’t just help get your property and your investment back on track, it helps get your life back on track too.
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