How to secure your investment property during Covid

COVID gave the world a shake-up and very few areas of our lives were left unaffected.

One of the biggest challenges faced by property investors and the professionals who support them was the rapid and often confusing changes to the rules around failing to pay rent or breaking a lease. New guidelines aimed to help those who lost their jobs due to COVID, but while they protected some people, they left others exposed. Many landlords who experienced financial loss had to turn to their insurers to make claims.

This led to many companies updating their policies.

Landlord insurance during a pandemic.

Your landlord insurance policy exists to help you cover major, unexpected expenses such as a tenant being injured or your property being damaged. It will also potentially save you from a trip to the tribunal (which can result in expensive legal fees).

In the past, landlord insurance potentially had also covered the loss of income due to a tenant breaking their lease or failing to pay rent. But if you have an existing policy, it may have been updated during COVID. As a result of this, you may no longer be protected in the event of your tenant defaulting on their rental payments.

Take a look at this article from CANSTAR, which lists the standard inclusions for most major landlord’s insurance providers. You’ll see that there is a wide variation when it comes to things like rental default, theft of items by tenants, malicious damage by tenants and loss of rent due to an insured event (like a flood, fire or storm damage). You might be surprised to find that the cover you thought you had no longer applies.

It’s also worth noting that many insurers are now assessing claims for lost rental income on a case by case basis. Where there has been proven hardship due to COVID, there may be allowances made, but it depends on the insurer.

Talk to your insurer about what you’re covered for. This will give you an indication of whether or not it is time to switch providers.

Landlord insurance: what to think about

An investment property is a high-maintenance asset but it can pay off if you give it the attention it needs.

When you take the steps to insure your rental property, check the fine print to review the following:

• What you need to do in terms of maintenance and repairs and security (your insurance may be void if the property obviously isn’t taken care of)
• Your obligations in regards to smoke alarms and heating
• How you are protected against breaches of contract
• Other insurance that is in place to protect strata premises

Building vs landlord insurance

In regards to the final point, if you’re in a strata building, the strata management will arrange and pay for building insurance. This covers things like pipes, gas and electricity systems, fences and swimming pools.

If your investment is in a strata building, your landlord insurance covers the inside of the apartment, any furniture or appliances that belong to you, rental default etc. Always check what your strata company is insuring for before you take out a policy (they will have information or it will be the annual general meeting notes).

When it comes to landlord insurance, you should at least be covered for the following:

• rainwater damage
• damage from explosions
• fire damage
• flooding
• malicious damage and vandalism
• theft and attempted theft
• impact damage (e.g. if a car crashes into the home)
• damage from natural events like earthquakes, lightning or storms
• civil unrest and rioting
• the removal of debris
• damage caused by leaks
• legal action against bad tenants
• legal liability for injury or property being destroyed

Here at HPA we have a wealth of experience in managing Sydney properties for over 30+ years and many satisfied long-term clients. If you are a property investor and would like to know more about our services, please give us a call today.