The Importance of Landlord Insurance
Landlords should have full insurance for their rental property, not only to protect against the important events including earthquake, fire and flood, but also for the additional landlord risks including loss of rents, tenant damage, landlord contents and meth contamination.
Because policies vary from one insurance provider to another, it is important to check what cover is included as standard in a policy, and what optional cover can also be added for an increased premium.
Landlords need insurance to cover the increased risk to their properties
As a landlord,you are open to much more risk if your property is tenanted and it is therefore, important that you make sure the property is insured specifically for rental. The responsibility for paying the premiums lies with the landlord/owner.
Talk to your insurance company about their rules for making claims. Some insurers need the landlord to prove that thorough tenant checks have been done. In this regard, employing a professional property manager who has stringent tenant vetting systems and procedures in place is recommended.
It is also important to note that cover will only remain valid if regular inspections (as specified in the policy wording) are completed. Failure to comply with this could lead to a claim being rejected, so it critical that these inspections are completed and recorded adequately.
If the tenancy agreement includes any furniture or other items you may also choose to insure these because any damage to them won’t be covered by the tenant’s contents insurance(if they even have any).
Amendment to Residential Tenancies Act (RTA) August 2019
On 27 August 2019, new legislation took effect, which affected tenants’ liability for damage.
Prior to this change, tenants were not liable for ‘careless’ damage to a property – this would’ve been covered by the landlord’s insurance. Now, if tenants or their guests cause careless damage in a rental property, they can be held liable for the cost of the damage up to four weeks’ rent or the landlord’s insurance excess, which ever is the lower.
Since the amendment to the RTA last year, landlords must provide insurance information in any new tenancy agreement, including whether or not the property is insured,and the excess amount of any relevant policies. Some policies have one excess applicable to all cover, whereas others have different excess amounts for different claims e.g. loss of rent,contamination, etc.
Whilst there is no requirement for us to pass on the full details of your policy to a tenant, you will need to confirm that this can be made available to them on request. It is also important that if you make any changes to your cover, that you advise your property manager so that this information can be updated in their records.
Key things to remember are:
· Talk to your bank and insurer (or independent insurance broker) to understand the cover you have/need.
· Ensure any existing cover you have for covers the risks from tenants adequately.
· Check the policy wording for what is covered as standard. Additional, optional cover for risks not included are usually available for a higher
premium – not all policies are the same.
· Be stringent in selecting quality tenants.
· Undertake regular inspections that comply with the time frames in your policy.
· Keep detailed records of correspondence,inspections, maintenance, etc.
Real Landlord Insurance NZ
We understand the importance of continuity of rental income and strongly recommend all landlords ensure that they have sufficient landlord protection insurance.
The Rent Shop Limited has an excellent relationship with Real Landlord Insurance NZ (RLINZ) who specialize in insurance for landlords and their properties. Feel free to visit their website at www.rlinz.co.nz for more information about the specialist cover they offer to or contact Diane Nelson (Director) for a no-obligation chat on 0800 003 545. RLINZ cover starts from $360 per year.