Guide to landlord insurance
Landlord Insurance is different to standard house insurance. It covers the house itself, and the extra risks you face being a landlord.
Homeowners are exposed to standard risks such as fire, floods, and earthquakes. Landlords are exposed to these standard homeowner risks, as well as the risks associated with renting to tenants.
What extra cover does Landlord Insurance provide?
Damage by Tenants
A standard house insurance policy might have cover for accidental damage caused by tenants, but will not cover intentional damage by tenants.
Intentional damage can come from your tenant punching walls, vandalising the property or throwing a raucous party. This is a common insurance claim for landlord’s, and can often prove costly.
Initio Tenant Damage Protection
Our landlord insurance policy provides full cover up to your sum insured for accidental tenant damage. You are also covered for intentional damage, vandalism or theft.
Damage caused by your tenant, paying guests, or any person who occupies the home (and any guest associated with these people) is covered.
Our policy covers up to $25,000 per event for intentional damage. Serious fire or explosion damage is covered over the $25,000 limit and up to your property’s full sum insured.
Loss of Rents
Rental income is essential to landlords.
If your rental is damaged and it can no longer be rented, you face both the costs to repair and the lost rental income you would have otherwise received. Standard house insurance will not cover loss of rents.
A landlord insurance policy will provide cover to rebuild your property, while also paying you lost rents if the home is unliveable while being repaired.
Tenant vacating without required notice or Eviction
You can also suffer loss of rent from sources other than property damage.
It can be common for tenants to pack up and leave their tenancy unexplained. Tenants can also be evicted for non-payment of rent if they are 21 days in arrears.
A gap in rent can then occur from when your tenant leaves, until a new tenant is found and moves in.
A comprehensive landlord insurance policy will protect you from these additional sources of lost rent.
Initio Loss of Rents Cover
We cover up to 52 weeks of rents, or the loss of rent sum insured you select.
Insurance is triggered when there is physical damage to your rental that means it can no longer be lived in. A flood damaged house can take months or even a year to repair, so is essential for any landlord especially those with mortgage payments.
We include $20,000 loss of rent for free in all our policies. That’s $384 in weekly rent for a year, with options to increase this to $40,000 or $80,000.
Tenant Eviction or vacating without required notice
We also cover rents for up to six weeks where your tenant vacates your property without the required notice, or is evicted for non-payment of rent.
Under some instances your tenant can legally stop paying rent under their tenancy agreement. We’ll cover rent for up to six weeks where there’s a prevention of access to the home, or where there’s a failure of utilities such as the power supply.
Meth is rampant in New Zealand and landlords are particularly at risk. A badly contaminated house can cost tens of thousands of dollars to clean so that it can legally be rented again.
Specialist landlord cover is vital, as a standard house insurance policy will not cover meth.
This can come from consumption (smoking), or manufacturing. A meth infected house can be considered unsafe to live in and will be required to be de-contaminated to an appropriate level.
Landlord insurance will cover the costs of laboratory testing, and cleaning where there is a positive reading. The cleaning process can take months, so a landlord policy with loss of rent cover on top of cleaning cover is essential for managing your risk as a landlord.
Initio Meth Cover
We provide up to $30,000 of protection for meth testing and cleaning costs where a positive meth test has been found.
Loss of rent cover applies over and above the $30,000 of cover. We will pay out your weekly rents while your property is cleaned, for up to a full 52 weeks, or up to your loss of rent sum insured.
These days it’s common for landlord’s to rent their properties pre-furnished. This can include valuable belongings such as appliances, fittings and furniture.
Landlord insurance policies now provide bolt on cover or extensions to cover small amounts of landlord contents. This can either be included as standard or you can pay extra to include it.
Contents can be covered for their depreciated present value. A good landlord insurance policy will pay for new replacement items.
Initio Landlord Contents Cover
Our policy automatically includes $20,000 of landlord contents as standard. For more kitted out properties there are options to increase this to $40,000 or $60,000.
This covers damage to your fittings in your rental, and can also cover theft of contents you include in the tenancy. Please note this applies to fixtures and fittings, but not your personal items.
We pay for a brand new replacement when the damaged item is no older than five years old. If the item is over five years old, we payout a present value replacement amount.