Insurance for Landlords - Protecting your investment property
For most Kiwis, owning a rental property is an important investment for growth by way of increased capital, or passive income, or in an ideal world – both of these. Following the Christchurch earthquake Insurers are now implementing a change in home insurance from open-ended (square metres) sums insured to a maximum dollar value and most Insurers have used the change as an opportunity to revise their policy wordings and many no longer offer the same Landlords benefits as previously provided.
As a result, there has never been a more important or relevant time for you as a Landlord to read and understand what cover your landlords insurance policy provides for your investment property.
Insurance for landlords is essential when renting investment properties. It is important for your policy to provide sufficient protection in the event of loss of damage. Here are a few things you can do to ensure your policy provides the coverage you need;
- Be sure that your sum insured is sufficient to rebuild the home. This is the maximum amount payable in the event that your property is totally destroyed, or classed by the insurer as uneconomical to rebuild. Insurers will provide a default sum insured when your policy renews – check that this will be enough to rebuild your home when you receive your renewal documentation. If it is not sufficient, call your Insurance company, or your broker, otherwise this is the maximum pay out you will receive in a total loss situation. You can read more about the changes to home insurance by clicking here.
- Check your policy wordings and benefits. What landlord’s additional benefits are automatically included and which ones do you have to pay extra for? Are the benefits payable in addition to, or included within your total sum insured?
- Do you have loss of rent cover? Would that amount be enough to subsidise lost rental income in the event of a disaster? Is there an imposed time limit, and would it be realistic to subside the loss of rental income if your home could not be rebuilt quickly?
- Is there an inflationary provision to reflect the increased costs or materials and supplies in the event of wide area damage?
- Are your landlords contents insured? Are they covered for an indemnity or replacement value basis?
- Some policies have limits or exclusions for any drug related activities i.e manufacture, storage and distribution. Having a Methminder unit may mean the exclusion is waived for claims for p-lab contamination clean-up costs. Click here for more information on Methminder.
At Crombie Lockwood we have knowledgeable brokers and access to many products to help guide you towards making an informed decision so you can be certain your investment is sufficiently protected. Click here to contact your local Crombie Lockwood broker.
Important Information The information on this website is only intended to provide a general summary or introduction to a product, offering or service. Any decision to purchase this product should be based on specific advice for your business or personal needs. For further information on this product, offering or service please speak to your broker.