Owning a rental property can be a solid investment, but what may prove just as valuable is landlord insurance.
Just like the home you live in, an investment property can be affected by natural disasters such as storms, floods and fires, or by accidental damage or theft. Having tenants means you also have the risk of loss of rent. This is why it makes sense to take out landlord insurance to protect your property and the income you receive from your tenants.
Making a landlord insurance claim for the first time can be daunting especially in the event of a major loss such as fire, storm or flood, or if you’re facing loss of rental income. To help navigate through the claim lodgement process and to remove some of the stress, the following tips should help you with your claim.
Seven tips for making a landlord insurance claim
- Contact your insurance provider either online or by phone as soon as you can. Try to have your policy number ready. If you don’t know your policy number, after confirming your details the insurance provider will be able to locate your policy and proceed with lodging the claim.
- The insurance provider will ask you a series of questions about the loss or damage. Photos of damaged items and receipts of purchased items can all be helpful in lodging your claim.
- Retain damaged items, especially water damaged contents – this can help with the timely authentication and replacement of items.
- In the event of theft, you should contact the police to report the incident and provide the police report number to the insurance company when lodging the claim.
- Where the structural integrity of the home has been compromised, in the interest of safety for you and your tenants, you should not personally attempt temporary repairs until a qualified repairer or assessor has inspected the home. Your insurance provider can assist with organising an inspection, and emergency repairs, if required.
- Always check with your insurance provider before paying for the replacement or repairs to the property and contents, as this could put you out of pocket and slow down the settlement of your claim.
- Depending on the extent of the loss or damage, your insurance provider may send out an assessor or company representative to inspect onsite. They may also arrange for qualified trades people or replacement specialists to inspect your property and to provide quotes for repairs. Alternatively, the insurance company may ask you to obtain your own quotes for repairs. It is important not to authorise any repairs to the property or replace any contents until your insurance provider has agreed.
How long will the claim process take?
Always confirm the next steps of the claims process with the insurance provider and the expected time of completion of those steps. This will help you to understand the timeframe involved with settling your claim, and hold the insurance company to account regarding the completion of assessment, the approval of your claim, and the commencement of repairs or replacement of items.
The minimum time and standard which insurance providers must meet when handling your claim are both set out in the Insurance Code of Practice.
Settling a landlord insurance claim
If your insurer has accepted your claim, in consultation with you, they will decide whether to repair, rebuild, replace or pay you the cost of repairs or rebuilding either your property or lost or damaged contents.
What if my claim is rejected?
In some situations, your insurance provider may not cover or pay your claim. If this happens to you, your insurer is required to tell you why. You can ask for this decision to be reviewed through the insurance provider’s own internal dispute-resolution body or by going directly through to the Australian Financial Complaints Authority (AFCA) for free independent resolution of your complaint.
What does landlord insurance cover?
While policies vary, generally landlord insurance covers:
- the cost of repairing any damage to your property from events such as flood, storms or fire
- the cost of replacing or repairing fixed contents such as carpets, light fittings, curtains or blinds, kitchen cupboards and built-in wardrobes
- the cost of fixing damage caused by your tenants and their guests, or replacing any stolen items
- loss of rent through events your insurer covers
- any legal costs.
Landlord insurance can also cover you if your tenants injure themselves while on your property. Always refer to the product disclosure statement to fully understand what is covered.
What doesn’t landlord insurance cover?
Landlord insurance generally doesn’t cover the wear and tear of your property or costs for regular maintenance issues, such as a plumber fixing a leaking tap.
It doesn’t cover you for any period your property is without a tenant, or for any repairs that a tenant may carry out themselves. Cover is also unlikely to extend to items such as trees, shrubs, or anything growing in the ground.
It’s important to have a tenancy agreement in place so you and your tenant fully understand what is and isn’t covered.
Find a landlord insurance policy that’s right for you
It’s important to know what is and isn’t covered by a landlord insurance policy before making the decision to purchase, so make sure you read your insurer’s product disclosure statement and ask the insurance provider questions to know exactly what you are covered for, and what you’re not covered for.
Comparing landlord insurance from several providers also helps in making the right decision. Some insurance providers also provide flexibility in selecting or deselecting specific benefits and features as well as choosing a suitable excess to meet your specific needs.