The Importance of Landlord and Contents Insurance for Strata
If you own a property in a strata or community corporation, the common areas of your building will be insured by your body corporate’s residential strata insurance. This type of insurance is obligatory and covers the building and common areas of strata properties. However, strata insurance doesn’t extend to the protection of your personal property, so if you are either a resident or landlord of a strata title property, you may want to look at additional insurance cover to ensure your property is covered. As a landlord you will want to consider landlords insurance. As a resident owner you will want to consider contents insurance.
Why you need landlords insurance
Landlord insurance is going to protect you from a number of very serious income losses or intentional damages, including;
Loss of rental income
Over 50% of landlord insurance claims are against loss of rental income, making this the single greatest reason to invest in landlord insurance. “Loss of rental income” refers to tenants that have either absconded or defaulted. With arrears being a very long and costly process to resolve, tenants falling behind in payments are a genuine risk for all landlords, regardless of the kind of property and area that they are renting out of.
The trouble for landlords is that it’s impossible to predict when a tenant is going to get into financial struggle. A tenant with a spotless payment record could potentially find themself in financial hardship and unable to manage payments. Health or personal problems might also prevent them from working. With rent being the biggest single expense for most people in Australia, it also tends to be the first expense that they default on.
Because it’s so common for landlords to claim loss of rental income, any basic landlord insurance policy should cover you for this. Ideally, you want a policy that will cover you for a range of circumstances under which the tenant defaults on payment (because some policies might deny a claim if you’ve knowingly provided the property to a tenant in danger of default).
Malicious and accidental damage
Landlords take a bond from tenants to cover the cost of repairs at the end of the tenancy, but it may well be insufficient if the tenant has been particularly malicious about damage, or had a major accident. Generally, a landlord insurance policy should include coverage for the more common examples of damage to the property – holes in walls, ripped carpet, broken doors.
Policies can vary wildly on this subject, and it’s important to know specifically what will be covered by it. Generally, landlords insurance will not cover damage that is already covered by your body corporate insurance.
Death of a Tenant
This is something that no one wants to experience, of course, but in the event where a sole tenant may pass during a lease agreement, it’s common enough that it’s part of many insurance policies. As a landlord, the last thing you want during this period is be insensitive to family and friends.
Why you need contents insurance
If you are a resident owner of a property in a strata building rather than a landlord, you may want to consider contents insurance to insure your property in the event of loss or damage.
Contents insurance protects against the damage or loss of your personal possessions and household items in a variety of circumstances, including malicious damage, theft, storm, flood, fire, earthquake and other natural disasters.
Contents insurance can cover a lot of things that you wouldn’t necessarily think of, but the cost of which can tally up fast, including:
- Furniture, jewellery and clothing
- Stereos, TVs, computers, refrigerators, washing machines, dryers
- Curtains, carpets, rugs
- Swimming pools and spas, gardening equipment
- Pictures and works of art up until a value agreed on in your policy
- Light fittings, paint, wallpaper, and ceiling coverings
One thing to note about contents insurance is that there’s generally no standard fit, and the cost – and amount covered – by contents insurance can vary wildly, even when you’re looking at policies from a single provider. Discuss with the insurance company what counts as “high risk” contents and how that might impact on your overall policy.
Need help finding the right cover?
Better body corporate management companies have a body corporate insurance management division. This is an expert team of insurance managers responsible for finding and securing the right cover, handling the claims process should any arise, and otherwise being an indispensable partner to the body corporate in keeping the building maintained.
If you’re after either landlords or contents insurance for your strata title property, we’ve partnered with CHU to offer market leading insurance cover at competitive prices. Find out more here.
