How Landlords Can Protect Themselves Against Rent Default
Like home insurance, landlord insurance policies are designed to protect against the unexpected. Whether you own residential or commercial property, these policies can help cover you against a range of financial risks involved with renting out an investment property. Here you can find a rundown of why rent default insurance is vital for landlords.
What Does Landlord Insurance Cover?
Landlord insurance typically covers investment property owners for a range of risks, including loss or damage caused by tenants. Depending on the policy, you may be covered for:
- Loss of rent due to tenant default or breaking of the lease
- Theft or burglary by tenants, their guests or other parties
- Malicious damage or vandalism by tenants or their guests
- Legal expenses required to evict a tenant
Landlord insurance may also cover damage caused by disasters and loss of rent if your property can no longer be used after an insured event. However, exactly what’s covered very much depends on the exact policy and inclusions you choose.
Why Purchase Landlord Insurance?
While most tenants will pay rent on time and treat your property with respect, it’s still important to ensure against worst-case scenarios such as a tenant who does not pay their rent or damages your property. It can also cover you for natural disasters like fires, floods and storms as well as other unforeseen events.
The recent COVID-19 pandemic is a good example of the latter. The lockdown, job loss, and economic downturn associated with the virus have meant many residential and commercial tenants have been unable to meet their rental payments. Landlords who are insured can opt-in to make guarantee they’re protected against rental income loss in such a scenario.
Get the Right Cover Before It’s Too Late
Landlord policies allow you to opt-in for rent default, tenant theft, and other scenarios. When crises such as COVID-19 strike, insurance providers get an influx of calls from landlords wanting to add rent default to their policies only to find that the insurer won’t accept the addition to their policy.
That’s because the issue is already here – it’s a known problem – and insurance is designed to protect you from the unknown. This makes it essential to ensure you’re covered for a wide range of scenarios ahead of time, so you don’t find yourself caught out when something unexpected happens.