Landlord Insurance policy vs Landlord’s nightmare

Have you heard of bad tenants? Or you can recall the ones you had?

Tom Hanks in The Terminal, Steven Spielberg’s 2004 movie famously said if you “say “yes” it is 50% chance to have it.

Landlord’s nightmares can be different but the most everyone afraid of is about tenants who smoke “P” or even worse who manufactures it. The only way to protect the landlord’s asset (the house) is to put insurance in place. There are three types of insurance policies which you can have if you are a landlord and want to have your landlord insurance policy provided by AMP.

House Insurance and Landlord Extension

  • House insurance which notes that the house is tenanted.

This is normal house insurance. The policy covers the building only. It does not provide any additional benefit to the landlord. An additional excess normally applies due to the fact that the house is tenanted, insurers normally take a point of view that if the house is tenanted the house is not going to get the same level of “love” as if it was occupied by the owner. I would strongly advice not to have this type of insurance on your tenanted property.

 

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  • “Landlord Extension” This is an add-on to your house insurance which covers your

house as well as it provides additional benefits to the landlord such as: Furnishings cover for $20,000 which covers dishwashers, stoves, refrigerators, washing machines, dryers and built-in microwaves that are not permanently wired into the home.

Loss of Rent if Home is uninhabitable – Up to $40,000 of weekly  rent payment according to the tenancy agreement during repair or replacement of your Home for maximum period of 12 months or up to 2 months if you don’t want your home rebuilt.

Loss of Rent following prevention of access or failure of public utilities. Weekly rent as per tenant agreement during repair or replacement of your Home for maximum period of 12 months or up to 2 months if you don’t want your home rebuilt.

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Landlord insurance policy

The uniqueness of the policy is based on that this type of policy can be used for any residential type of property including apartments even the apartment itself is covered by the “Body Corporate” insurance you apartment can have this type of cover providing protection to you “the landlord”.

Landlord Insurance is suitable for houses, units an as I have mentioned above apartments. This policy specifically covers your property if it was damaged by tenants up to $30,000 (cost of rebuilding or repairing the damaged portion of the property insured or indemnity value if you do not rebuild or repair within a reasonable time).

Please read it again and consider the following: the type of policy I have explained above “1” “tenanted” and “Landlord Extension” will not provide you as the landlord with cover due to the fact that the damaged can be seen by the insurer as “malicious” therefore only “Landlord Insurance” would cover damaged by the tenants house.

Landlord insurance will cover “Loss of Rent if Home becomes untenantable as a result of property damage caused by tenant(s)” for up to 12 months. The policy would pay as follow:

  1. The value of 26 weeks rent at 100% plus
  2. The value of 13 weeks rent at 75% plus
  3. The value of 13 weeks rent at 50%.
Landlord insurance - loss of rent payments

Landlord insurance will cover you in the event of “Loss of Rent following prevention of access or failure of public utilities” for up to the value of 8 weeks rent.

Most importantly “Landlord Insurance” will pay Loss of Rent due to non-payment by the tenant(s) following their vacating of your property without giving the required notice for the value of 8 weeks rent.

Landlord insurance will cover you in the event of Loss of Rent following Eviction of your tenant(s) from your property following non-payment of rent

  1. the value of 8 weeks rent at 100% plus
  2. 4 weeks rent at 75% plus
  3. 4 weeks rent at 50%.

Landlord insurance loss of rent following eviction of tenants

The policy will even cover you as the landlord for up to $1,000,000 due to accidental physical loss or accidental physical damage to the tenant(s) property at the property insured for which you are legally liable. And even accidental bodily injury to your tenant(s) at your property for which you are legally liable for $100,000 and legal representation for the last two points with some limits which will apply.

As you can see from the comparison between Landlord Extension and Landlord Insurance policy  which I have made as a table here for your easy reference or you can download it as a PDF document at the bottom of then page the choice is yours. If you considering which policy is better, let’s look at the following:

According to the “Building Housing & Information New Zealand website

“The Tenancy Tribunal issued its first decision about a rented property contaminated by being used as a P lab on 11 June 2004. The Tribunal ruled that renting out contaminated premises is a breach of a landlord’s obligation to provide premises in a reasonable state of cleanliness. This obligation is set out in Section 45(1)(a) of the Residential Tenancies Act 1986 (RTA).

To ensure they meet those obligations the Tribunal stated that landlords should:
Every landlord should protect himself from nightmare with Landlord insurance policy

  • Arrange for the property to be cleansed and decontaminated by a professional cleaning company experienced in the removal and neutralisation of hazardous substances and;
  • Have the property tested by appropriately qualified and analytical chemists to establish that the level of contaminants is within an acceptable level.

If landlords rent out a property that is contaminated, they are breaching their obligations under the RTA, as well as other legislation such as the Building Act and the Health Act.”

If you want your house to be insured with an insurance specialist and sleep assured that your property is insured in the right way please get in touch with me:

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Photos courtesy of AndreasS(CC ShareALike)