According to the Australian Institute of Health and Welfare (AIHW), there were more or less 9.8 million households in Australia, and 31% (or nearly 2.9 million) were renters as of 2021. The break of which as follows: 26% (2.4 million) were renting from private landlords, 3% (277,500) were renting from the state or territory housing authorities, and 2.4% (223,600 households) were renting from other landlords.
These numbers show that a significant portion of the country’s population are renters, and it is expected to increase in the years to come. For property owners who rent out their assets, it is crucial to understand different types of insurance, including commercial property insurance, strata insurance brokers in Melbourne, and more.
While many insurance policies can protect property businesses, this article will focus on debunking the common myths about landlord insurance in Melbourne. Continue reading the list below to look at business insurance brokers in Melbourne from a fresher perspective.
Myth #1: My Property Is Covered When Tenants Go on a Holiday
It’s good practice to ask if tenants plan to leave the property unoccupied for an extended time to go on a holiday or vacation. That allows the landlord to check the insurance to ensure it covers the property without the tenants. Insurers may restrict the insurance coverage depending on how long the property is unoccupied.
Myth #2: Landlord Insurance in Melbourne Will Cover Loss of Rent in Any Event
No insurance will cover the property for any event. However, it may trigger landlord cover depending on the policy:
⦁ Tenant(s) defaulting on rent
⦁ Tenant(s) eviction
⦁ Tenant’s death
⦁ Tenant’s hardship order
⦁ Unsafe living conditions because of an insured event, such as after a natural disaster—flood, fire, etc.
Another myth is assuming tenants should be on a fixed-term rather than a periodic lease, so the landlord can claim for loss of rent. Policies vary, and it is best to check the fine print. If the property is a unit, apartment, or flat, the insurance coverage of the corporate body, given that one exists, generally only covers the building and common areas.
Myth #3: Insurance Coverage Is Set for Life
Like landlord insurance or strata insurance brokers in Melbourne, commercial property insurance is not set for life.
Most policies usually run for twelve months. After that, the property owner needs to renew them. Insurers must give landlords a fortnight’s warning that their policy is expiring. Notices like an email could be easily missed in a full inbox, particularly without direct debit payments.
It is highly advised to inform insurers of any changes to property details and circumstances, including:
⦁ Renovations that will affect your risk or sum insured
⦁ Changes in long-term rental to Airbnb Landlord (Insurance may only cover three months or longer stays due to higher risks from shorter stays. But short-term rental insurance is increasingly becoming available.)
At renewal time, check for policy changes that may have occurred since signing up.
Here’s one substantial change late last year: significant insurers agreed to stop pursuing renters to pay for unintentional or accidental property damage, says consumer organisation Choice. As for what types of intentional damage are covered, insurers differ in their definition and determinations.
Myth #4: Self-Managed Property Saves Money
Smart Property Investment says outsourcing rental property management will cost you between 4% and 15% of the weekly rent and GST. It offers value because the manager will:
⦁ Carry out periodic inspections to ensure the tenants are maintaining the property well
⦁ Pay bills on your behalf from the rent collected, such as council rates, water services and land tax, if you wish
⦁ Organise emergency repairs
⦁ Source tradespeople and local vendors in bulk, so generally means discounted services
⦁ Sort out periodic mandatory tests of gas, water and smoke detectors
⦁ Know about the legal rights and responsibilities of landlords and tenants
⦁ Act promptly when the rent falls into arrears.
Additionally, the fees paid to the property manager are tax-deductible.
Get Reliable Insurance Policy Insights from Reliant Business Insurance!
Talk to us at Reliant Business Insurance for guidance on the best-fit policy for your investment property. We can negotiate on your behalf to achieve a discount on your premium. That’s often the case when you bundle separate policies into a package. Importantly, we’ll tell you what’s covered and not. It includes an update on policy changes over time.
You may call 03 8905 4753 or email info@reliantbi.com.au.