Taking out landlords insurance is one of the most important decisions a landlord can make. However not every landlord does, putting themselves and the property manager at risk.

By Tim McKibbin

It can take years for a landlord to acquire an investment property, but only a few moments for it all to turn to disaster. Being a landlord is a risky business. Fire or storm damage can result in hundreds of thousands of dollars’ worth of expenses, including lost rental income while the property is uninhabitable. Then there are the risks of theft, accidental damage, malicious damage or vandalism caused by tenants and the potential for rent default.

Home building insurance generally only covers losses to the building and frequently excludes damage or theft caused by tenants, which is why it is important for landlords to also have landlords insurance.

Landlords insurance provides the landlord with protection against the additional risks that may stem from the property being tenanted. Some of the biggest concerns for a landlord can include damage to property caused by the tenant, and a loss of rental income due to the property becoming uninhabitable or a tenant suddenly leaving or not paying rent. Where landlords insurance is in place it provides the landlord with the comfort of knowing that these risks are addressed.

Best practice

As agents, you need to constantly strive to add more value to your suite of services, and by discussing the importance of landlords insurance you're providing an additional service that benefits both you and the landlord. Landlords insurance adds value to your rent roll because it diminishes risk from lost income. It also makes that uncomfortable call to the landlord about damage or loss of rent from the tenant you selected a lot easier because you are offering them a solution to the problem.While agents are not expected to be risk experts, discussing the risks a landlord faces and managing that risk with insurance is best practice.

Every landlord should have landlords insurance: it generally costs less for a year's cover than the average weekly rent in NSW, and most policies provide protection of up to $50,000 for loss of rent and tenant damage, plus up to $12,000 cover for losses arising from rent default. By introducing an insurance product to the landlord, any insured losses with the property go through the insurance provider, saving you valuable time. 

Encouraging your landlords to take out landlords insurance really is a no brainer. It’s in their best interests and in yours too.

The Realtyprotect solution REINSW is committed to assisting you to manage the risks a landlord faces, so we have entered into a relationship with CGU. To make the task of acquiring landlord insurance as easy as possible we have developed an automated one-minute insurance acquisition solution called Realtyprotect. Realtyprotect, endorsed by REINSW and underwritten by CGU, makes protecting a rental property simple for both the property manager and landlord. All a property manager needs to do to arrange a landlords insurance quote is to click a single box while completing a management agency agreement in REI Forms Live.  A quote is automatically generated, which can be emailed with the policy details to the landlord, who can then purchase it through a simple two-step process in which the landlord first nominates the start date and secondly chooses how to pay the premium.  A tax invoice and policy schedule are then generated, which are sent to both the property manager and landlord. This online process using REI Forms Live saves you time as the client information has already been copied across from the agency agreement to the policy. We have also added a question within REI Forms Live: “Do you require a quote for landlords insurance?” The answer to this question creates a permanent record that the landlord has accepted or, equally importantly, refused the insurance opportunity to manage the risk. The response to this question protects the agent as it shows the issue was discussed. For more information about Realtyprotect, please REINSW’s Bill Sharland on 0411 013 853 or email [email protected]