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How can I insure my Multi Unit Rental Property?

With initio there are two ways you can insure your multi unit rental property.  We consider a ‘multi unit rental property’ to be multiple self-contained units under the same roof.  It is important that you understand the two different ways you can insure multi units and choose the approach that best suits you.

Option 1:  Insure the units individually

The first option is to insure each unit separately, with a specified sum insured for each unit. To insure online you will need to enter the details of each unit into the quote calculator and follow the process to start the cover.  Once the first unit is insured you can easily ‘add’ additional units from your dashboard.  Each unit will have its own policy and policy number.

Traditionally, this was the only approach we offered. The benefit of this approach is that each unit enjoys full un-diliuted access to the policy benefits, including but not limited to; loss of rents, landlord’s contents, gradual damage and the like. Because more cover is provided with this approach, the overall cost of insuring each unit individually is higher than if you insure them together.

If you want the full extent of the initio cover for each unit – this option is the way to go.

Option 2:  Insure the units together

The second option is to insure all of your units together, for a total insured value across all units.

The benefit of this approach is that you do not have to pay a ‘minimum premium’ per unit and therefore the cost to insure is lower than if you insured them individually.  The drawback however is that some benefits including the landlords contents limit will be shared across all the units. This means that you might find yourself underinsured, if all units insured suffered a major loss (such as a fire) and had to share in cover for the contents.

If cost is a concern, and you don’t mind sharing the contents cover across all units this option is for you.  With this option we recommend that you run the numbers to make sure you know overall risk if there was a major loss, and try to select insured values (property sum insured, loss of rents, contents) that reflect these risks.  Remember that with Initio you can increase the loss or rents and the contents covers during the year.

Claims Examples

Scenario: Four units insured with a Replacement Value of $200,000 each; Total Replacement Value $800,000. Standard policy extensions and limits apply.

Earthquake

An Earthquake damages the entire dwelling, all units and their landlords contents are damaged, the units are uninhabitable. It is estimated repairs will take 12 months.

  1. If the units are insured individually the policy would payout per each unit up to $200,000 for the building, $20,000 for the contents and $20,000 for the loss of rents. Total Payout –  up to $960,000.
  2. If the units are insured together, the policy would pay out up to $800,000 for the building, $20,000 for the contents and $80,000 for the loss of rents. Total Payout –  up to $900,000.

Hidden Gradual Damage

During the year a water pipe is leaked in Unit A, costing $5,000 to locate and repair the resultant damage. Unit B also has a leaking pipe, with claims costs of $1,500.

  1. If the units are insured individually the policy would payout up to $3,000 for each unit during a 12 month period. Total Payout – $4,500.
  2. If the units are insured together, the policy would pay out up to $3,000 during a 12 month period.  Total Payout – $3,000.

Damage to Landlords Contents

Contaminated flood waters ruin the carpets and curtains in all 4 units. The present day value on the items is $10,000 per unit.

  1. If the units are insured individually the policy would payout up to $20,000 for each unit. Total Payout – $40,000.
  2. If the units are insured together, the policy would pay out up to $20,000.  Total Payout – $20,000.

What if I only own one unit?

In most cases yes we can insure your individual unit. However, if your unit is part of a Body Corporate we are unable to offer insurance. Also, if your unit is directly attached to more than one other unit (i.e. the middle unit in row of 3 units) we are unable to provide insurance. Ideally we recommend that all attached units are insured with the same insurer, and suggest you have a chat with your neighbours.