Landlord Protection Insurance covers the landlord for damages caused to the property by the tenant. Sometimes the bond money can be nowhere close enough to cover the damages caused to the property. The strata insurance and the home contents insurance will not cover the damage caused to the property by the tenant. This is where the landlord protection insurance comes into play.

Here are five things you should be aware of/look into before signing up for this insurance:

1. What Damages Does The Landlord Protection Insurance Cover

Find out if the insurance covers the following:

• Accidental Damage To The Property (unexpected damage to the property)




• Malicious Damage (intentional and damage caused with malice - most insurers need you to provide them with a police report before you can make a claim - an example would be if a tenant takes a spade and intentionally damaging the walls)




• Damage Where There Is No Malice But Still Is Damage (example a child writing all over the walls with crayons).

2. What Rental Loss Does The Insurance Cover

Check if the insurance covers for loss of rent when the: Defaulting tenants Absconding Tenants Unable to let the property out due to the damage caused by the previous tenant Death of tenant who is under sole tenancy

For each of the above rental covers you need to find out how many weeks rent will be covered. The amount covered will usually be different for every scenario. For damages as well find out how much amount you are covered for.

Some of the other expenses the insurance should cover you for are:

• Legal expenses - if any action needs to be taken against the tenant
• Thefts by tenants

3. Excess

Most policies have really high excess and sometimes huge excesses defeats the whole purpose of having this insurance. Check the following:

• Excess for any rental loss - usually this excess is zero




• Excess for damages is either determined per event or per claim. Some insurers determine the accidental cover excess per event and the malicious per claim. Some insurers determine it per event for all damages.

When it is per event, you have to be really cautious - check what the definition of an ‘event’ is. If you have multiple crayon marks on walls, each can be classified as a different event (depends on when it occurred) - If a child draws on all the walls in the house it is one event if the child does not take a break. But if the child takes breaks then it can become multiple events. I am no expert - but this was my understanding when I spoke to a couple of agents over the phone.

So check what defines an ‘event’. The excess is usually $350 per event…So if the paint jobs become multiple events, your expenses might actually never exceed the excess and hence you might be unable to claim anything.

4. Claim Procedure

Once it has been decided that the insurer will have to pay you, find out the steps involved in getting the money into your account. Find out what the waiting period is.

5. Furnished Properties

This insurance by default will not cover the furniture in the house. But if you are letting out a furnished property then you might need a cover for furniture as well. Also you might not have a furnished property but you might have a dishwasher and refrigerator. Find out if they are covered by default or if you have to pay extra for it.




Some insurers offer you a discount if you have multiple properties insured under them. So it pays to do your research and pick the best insurer and once you find the insurer that most fits your needs, insure all your investment properties with them.

The premium you pay is usually determined by the state in which the property is located. The size of the property does not matter. Usually for up to 1000 dollars of rent per week, the premiums are the same (in a state). Once the rents exceed 1000 dollars per week, you need to ask for an individual quote.

One of the common myths about this insurance is that it will cover you for any rental losses in between two tenants (time gap between one tenant leaving and finding a new tenant). Wish it did but this is not the case.

This is one of the few insurance policies that wont cost you an arm and leg - it is usually between 5 to 8 dollars per week. The low cost does not mean that you can just sign up with any insurer. Do your research, watch for the nasties in the fine print and pick the one that most suits you.

And finally the premiums for this insurance is tax deductible.

Do you have this insurance? What has your experiences been with this insurance?

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