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If you have a property you are renting out, you may be worried about damage and what you can do to protect yourself and the value of said property. The logical solution calls for landlords’ insurance, which is, by most standards, a good idea. However, we need to look into it and assess the option from every point of view, in order to determine whether or not it’s worth the extra cash.
Landlord’s insurance covers some things, but not all.
The first thing you should know is that the majority of insurance policies will cover in case of a destructive storm, fire, or other natural disasters, in case of theft, and it will also cover fittings and fixtures and the building.
However, you may want to keep in mind that insurance will not cover for thoughtless tenants who don’t really care about your property or preserving it the way you would like. Let’s look at what landlord’s insurance does cover:
- Potential legal expenses, in case you take legal action against a tenant who did not comply with the agreement or contract
- Rent, in case the tenant evacuates at an earlier date than planned or defaults on payment
- Theft at the hands of your tenants or guests of theirs
- Liability, should a tenant make a claim against you
- Malicious damage caused by your tenants or any of their guests
Landlord’s insurance costs extra, but it protects you and your property
Now, it’s true that this insurance is going to cost you extra money every month – money you may not necessarily be willing to shell out of pocket – but you also have to keep in mind the fact that disagreements and problems between landlords and tenants are pretty much par for the course.
While there are plenty of lovely people who make excellent tenants, there are also disrespectful people who will cause problems, and you want to give yourself a safety net in case something does go wrong.
In addition, it is possible that your insurance premium is tax deductible, so you may be able to get your money back. If you are diligent about keeping receipts and handing them over to your accountant, you will be able to get a bigger tax return.
If you do decide to take out landlord’s insurance, remember that not all policies are the same, so you have to pay attention to the details and the differences between them. Some will cover everything, while others may require you to take out a separate contents or home insurance.
Pro tip: you have to read the Product Disclosure Statements very carefully to see what you are covered for, or not. In conclusion, landlord’s insurance is worth it, in most cases and for most people, because it provides peace of mind. Sure, it requires you to pay extra, but you may be eligible for a tax return, and you will be sure that your property is protected, in case something happens, whether it’s a natural disaster or a destructive tenant.
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