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If you own an investment property – it could be a rental, or a holiday home, this insurance is for you.
Imagine if the property was damaged or destroyed by fire. Without insurance, your investment income would go up in flames.
Also keep in mind that, if your investment property is financed , your financial institution may request to see proof of insurance for the property.
Two of the key potential issues covered by landlords insurance are Loss of Rent and Rent Default. The definition of these issues are understandably sometimes confused, as the meanings and wording are similar. Below are explanations of each and what is covered.
Loss of rent cover
This covers for loss of rental income resulting from damage to the building.
Loss of Rent covers you for lost rental income should your property become uninhabitable by the tenant due to fire, flood, serious building damage or other major issues with the property.
Rent default cover
Rent Default is where the tenant stops paying rent.
This is understandably important on the list of landlords' concerns. In the majority of cases, payment default happens when the tenant's income is stopped or reduced due to an unforeseen event such as losing their job, sudden expenses, divorce, or illness.
While choosing reliable responsible tenants is important, anyone can come under hard times unexpectedly and this cover-type insures for just that.
The costs of repairing building damage or deliberate malicious damage left after tenants vacate a property would also be covered under rent default cover.