The right cover for your needs: an introduction to home, contents and landlord insurance
Isn’t it so exciting to buy your first home? Or finally be in a position to purchase an investment property? That is real adulting right there, and it is so gratifying.
And while shouting from the rooftops about achieving your life goals is entirely reasonable, one thing you really do need to factor in, as part of this adulting business, is insurance.
The last few years have certainly proven that life can be unpredictable. Without the right insurance, these unexpected events can not only be stressful, but expensive.
Your home is probably the most significant investments you will make. Whether you’re a live-in owner or an investor, it’s something you need to be proactive in looking after to ensure you are protecting your future financial security.
Selecting the right type of insurance for your circumstances is crucial.
What is home insurance?
Home insurance, sometimes called building or property insurance, protects your property from loss or damage due to unexpected events. As well as your home, it also covers carports, garages, fences and any fixtures permanently attached to the house like carpet, doorknobs and drawer handles.
The unexpected events a home insurance policy covers will differ from policy to policy, and not all policies will include things like floods or fires. On the flip side, you may not want to bother paying for a policy that includes cyclone insurance if that’s not a risk factor where your property is located.
What is contents insurance?
Contents insurance covers any of your possessions that are stored at the address of the insured property. This includes things like furniture, electronics and anything else not attached to your home.
Home insurance and contents insurance are often packaged together and, very creatively, called ‘home and contents insurance’.
Obviously, as a homeowner it’s a good idea to have your property insured. And if you are a live-in owner it’s a great idea to have home and contents insurance. However, standard home and contents insurance won’t cover you if you plan on renting out your property. This is where landlord insurance becomes important.
What is landlord insurance?
Landlord insurance is a special type of insurance designed to protect landlords from the risks involved with having a tenant. As well as damage caused by tenants, landlord insurance can also insulate you from losing rent if your tenants abandon your property or default on their payments. Obviously, the extent of what landlord insurance covers will vary depending on your chosen policy.
At Independent, we suggest discussing your landlord insurance options with your property manager, as they are able to provide advice about your specific needs.
Really, landlord insurance is about providing you with stability, giving you assurance that the income stream you gain from your investment property is protected from circumstances outside of your control.
What is renter’s insurance?
A responsible tenant will take out their own contents insurance, as the landlord insurance policies won’t cover them in a situation where their belongings are lost or damaged. On the flip side, a tenant’s insurance policy will not cover the landlord’s property, so it’s important that each party cover themselves with their own policies.
Side by side: Landlord insurance vs home insurance vs contents insurance
Choosing the right combination of insurance is an important part of protecting your investment.
*It’s important to note the above table is a broad example and policies will vary from provider to provider.
Property managers and landlord insurance
Property managers always prefer the landlords they work with have the appropriate insurance. Some may even refuse to take you on as a client if you aren’t willing to take out a landlord insurance policy.
Not all insurance policies are created equal. As an example, some landlord insurance policies won’t cover you if your tenant is on a month-to-month lease as opposed to a fixed-term lease. Having the wrong policy could end up being a costly mistake.
At Independent, our property managers will assess your individual needs and direct you to a trusted insurance provider that offers an insurance product that suits your circumstances. This will help prevent you from overpaying on your policy or getting a policy that doesn’t properly cover your property.
What policy is right for me?
Insurance is a big topic, and understanding the different types is just the tip of the iceberg. The right policy for you will largely come down to your individual needs and the specific details of a policy.
If you are after a recommendation for a trusted insurer, chatting with our property management team is a great starting point.
*Independent is not a financial advisor. The information contained is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before making any commitment of a legal or financial nature you should consider the appropriateness of the information having regard to your circumstances and needs and seek advice from a legal practitioner or financial or investment adviser.