Insurance is important for both landlords and tenants.
Landlords should insure their rental property against any damage. Tenants should also have insurance for their belongings, and to protect them from liability. Speak to insurers for more details about their policies.
Landlords need insurance to cover damage
If you’re a landlord, make sure your property is insured and that the cover is for a rental property. Landlords are responsible for paying the premiums.
Policies can also cover things like vacancy periods or tenant damage. Check your policy to see what it covers.
Talk to your insurance company about their rules for making claims. Some insurers need the landlord to prove that thorough tenant checks and regular inspections have been completed.
You may also choose to insure any furniture or other items that are in the agreement. Any damage to them won’t be covered by the tenant’s contents insurance.
Liability damage
From 27 August 2019, new legislation took effect which will affect tenants’ liability for damage.
If tenants or their guests cause careless damage in a rental property, they will be liable for the cost of the damage up to four weeks’ rent or the landlord’s insurance excess, whichever is lower.
As a result of this law change, there is now a legal requirement to include an insurance statement in all new, varied and renewed tenancy agreements after 27th August.
If you fail to do this, you risk being liable for a $500 penalty per tenancy.
To make this process as seamless as possible there are three fields you are required to fill out:
- Is the rental property insured?
- Is there an insurance excess?
- What is the dollar value of the excesses?
- If you have more than 1 excess which is likely if you have both landlord insurance & house insurance you will need to list the different types of excess e.g. house insurance, landlord’s content, accidental damage by tenant, intentional damage by tenant, contamination damage.
Please note, different policies may have different types of excess so please ask your insurer for this information if you are unsure.
Once you find out this required insurance information you will need to fill out an Insurance Statement and send it back to your property manager.
