Compare Landlord Insurance “Real” vs “AMP Landlord” Cover

The biggest mistake I witness many landlords make:- is not to pay attention to the “limits” of the insurance policy for their rental property. This article is designed to compare Landlord Insurance policies from two different New Zealand insurers.

Compare Landlord Insurance limits

First of all, let me explain what “limit” for a landlord cover means.

“Definition of policy limits for landlord insurance is the amount shown in the policy wording or a special term or description defining amount or situation”.

For instance, think about your car insurance: does it have a limit? Most likely your car policy has a limit on car keys replacement amount. Meaning if you lost your “BMW” keys the insurer would only pay “x” amount of dollars.

Now back to Landlord Insurance comparison. If one of the policies you consider says “x amount of dollars” for cleaning contaminated by use of “unlawful substances house”. Think about the amount of money listed as the limit and ask yourself a couple of questions:

• Would the amount be enough to clean my house?
• Am I willing to take the risk of a limited insurance policy for a sake of a few dollars?

If you answer “yes” to both questions above– make the decision. If, however you are not yet fully convinced – read on.

Secondary element of the decision making process is to compare underwriting insurance companies.

When you think about a landlord insurance policy concider the following:

1. Who is the intermediary (the seller)?
2. Who in the claim situation will pay the claim. (Underwriting company)?
3. Who is going to help you with claim process?

Compare Landlord Insurance for New Zealand’s market

In New Zealand landlord policy market is very limited. There are only three major insurance companies “underwriting” policies. There are a few insurance companies “designing” actual products.

Recently, most likely due to increasing numbers of “P contaminated” houses and media attention to the situation many different landlord insurance policies appeared on the market.

Compare Landlord Insurance limits: (expensive difference…)

Just a few days ago I was contacted by a person who didn’t want to be identified for a discussion about the situation the person was in:

Imagine – a big house (200 SQM) was rented out by using a property management company.

In a few months’ tenants moved out leaving “an impression” to check the house for “P”. The landlord did check the house to discover that the house was contaminated. To the level where in order to fix the house more than $100,000 would have to be spent. Think about $100,000 to clean and fix. Not to mention that during that time the house is going to be empty…The mortgage on the house must be paid.

Our “lucky” landlord did take a landlord insurance policy before tenants moved in and was assured by the property management company that the house is “fully” covered. It turned out the policy has $25,000 on the clean-up and the rest have to be paid by the landlord. Clearly the property management company had failed to explain limits.

You most likely think – well the landlord should have read the policy… yes, you are right but it does not help now…

This is why you would want to pay attention to “limits” when you choose landlord insurance for your own rental property.

Back to the comparison:

• REAL Landlord Insurance provides cover for unlawful substances like “P” – maximum policy pays is $25,000. Question: Would you be able to fully repair and rebuild your House for $25,000?
• AMP Landlord Plan covers unlawful substances for up to $30,000. Please refer to attached information about Landlord Plan.

AMP Landlord Plan. This cover will cost you a one-off $275.80 annually incl. GST (for weekly rent of up to $500).

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Compare Landlord Insurance VS Landlord Extension 2016

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A few more questions landlords ask in regards to Landlord Insurance

• I am looking for a policy with “no excess” for glass + sanitary fixture, is this possible?

I have never come across a policy which would allow $0 excess or “no excess” on a “tenanted” house. The logic behind this is based on “zero excess” encourages claims and claims are not what any insurance company wants.

In fact, majority of insurance companies would load the excess and typically this would be “hidden” behind words like “additional tenants excess” meaning that on the top of your normal excess you would yet have to pay some money.

“Tenanted” property always seen as a higher risk for any insurer to compare to “an owner” occupied and this is the reason for slightly higher premiums on a tenanted house insurance.

• Landlord plan, what will be the cost if rent goes more than $ 500

Typically, you would advise the insurer that your rent is higher to what it used to be -which would result in an increase of premiums for only a few dollars.

• What would you recommend on excess, should I opt for higher excess?  

An excess allows you have an insurance policy, pay for it as much as you have to and yet keep it affordable. Keep in mind property insurance claims in general are based and paid for accidental damage.

Think about Christchurch from a landlord point of view – if you had a house partially damaged would you feel better with or without landlord insurance?

My opinion if you worry about “right approach” and yet initially did not want to have excess at all – go with the lowest for this year and once happy increase excess next year.

In my view it is better to have the following structure:

House “tenanted” with landlord extension and Landlord insurance, the package would allow you to treat your insurance company as your “partner in law” meaning if something goes wrong with your property you (the property) are covered.

I mean any possible scenario which can cost you money or cause damage to your property became insurance company RESPONSOBILITY. I cannot think of situation where it can be better than that.

The only thing for you is yet left to do is to document property inspections.

I would also strongly advice with each and every new tenancy to get a “meth” test done – that would always allow you to have legal grounds to insure your claims are going to be paid. (Perhaps think about how you can pass the test cost to tenants – after all they do it for themselves…)

Being a landlord is not easy but it certainly can be a lot less stressful if you have:

1. Right insurance
2. Processes
3. Procedures

Please make sure all your records are safe.

Once again your “partner in law” should not have any legal grounds to be able to decline your claim.

• Claims

I prefer to be involved in claim process right from the beginning. Reason for it is based on – any claim can have two, three or even more interpretations. It is one story how you “see a claim situation” and the other how your “insurer sees it”. I believe I can help my clients to make sure that their insurer “sees” the situation same way as my clients.

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