However, risk management is a crucial part of owning an investment property. As you know, with all the best driving skill and experience in the world and the fittest, healthiest individual, they have no guarantee that they won’t have to claim on their car or health insurance when they least expect it. Owning an investment or rental property is no different. Things can and do go wrong despite the fact that every detailed has been managed and monitored.
Landlord insurance is one the most the most effective and affordable insurances available.
Most specialist landlord insurance policies should cost no more than $300 per year and we strongly recommend that our owners are covered (at the very least) for loss of rent, accidental and malicious damage through such policies. Generic landlord insurance, for example, with a bank or one of the large providers, mentioning no names but the red and white catchy theme tune insurers, have very limited cover for the particular scenarios that may occur with investment properties. It is crucial when researching landlord insurance that the owner compares the quality of policies and what is covered.
Sometimes, in the event of having to recover monies from a tenant, for example, to cover rent arrears, the route is either to claim on insurance or to do this through the courts. We would recommend the latter. In our experience, when a magistrate rules in favour of the owner, but the bond does not cover all the rent and there are other costs due to the owner, it is highly unlikely, that the tenant will pay the remainder of the debt.
With the owners’ authorisation, a call from us to the insurance provider and submission of the necessary records kept by us, payment can be made quickly, sometimes in only two weeks.
Next time I will share with you two case studies where an owner has chosen to
1. Claim through the courts and
2. Claim through insurance.
These compelling and real life case studies will help you to understand how to effectively manage risk and mitigate financial loss and the pivotal part a licensed and professional property management company plays in managing those unexpected and unplanned for situations.