Insurance for investment properties
Insurance won't stop the unexpected from occurring, but it will provide you with the peace of mind that no matter what the world throws at you, you should be covered (of course, there will always be exceptions).
Home and contents insurance
Just like when buying a home you intend to live in, home and contents insurance is a must for property investors just as it is for renters.
You may not live in your rental property, yet there are still many things that are important to cover in the case of accidental - or wilful - damage, such as fittings, curtains, carpets, appliances, fences, gates and walls.
Seasoned property investors may indeed already have a life insurance policy in place, but if this is your first foray into the property market, now is a good time to think about arranging your own.
Whenever you take on a large debt, such as a mortgage, it is important to consider what would happen if you lost your ability to keep up with your repayments.
Whether through an accident, an infirmity or a tragic event, if you cannot meet your loan obligations, this can have serious consequences for your loved ones.
With a life insurance policy, you can ensure that your loan repayments are covered in the event that you lose your ability to earn an income.
There is of course a type of insurance designed specifically for the needs of property investors - landlord insurance.
This can cover you for the risks inherent in operating a rental property. These include cover for damage to your property caused by tenants, fire, and theft.
It can also provide cover for rental payments in certain situations, such as when tenants leave without giving notice and you, the property owner, need to cover mortgage payments in their stead.
Dealing with vacant periods is one of the challenges of being a property investor - landlord insurance can kick in during periods of extended vacancy so that you don't get too out of pocket while looking for new tenants.
Doing some work?
Often, investors will buy a property and then do some work on it in order to make it more appealing to tenants, increase its saleability, or simply to get it into shape for the rental market.
In these cases it is important to remember that any renovation or addition will likely add to the value, and more importantly to the cost of rebuilding or repairing your property in the event of a loss.
Thus it is critical to reassess your sums-insured whenever you've undertaken work on your investment property.
Smart investors will consider the insurance implications before even starting the work. It is important to take into account the impact on your premiums that an extension may necessitate.
Get a tailored solution
Just like home loans, insurance policies are not a one-size-fits-all solution. It is important to find a set of covers that respond to the risk priorities inherent to your circumstances.
Once you've found what you believe to be a good match, regular reviews will ensure that your policies continue to provide sufficient cover for your investment activities.