It’s essential to protect your investment with the appropriate insurance, which includes building, contents, public liability, workers’ compensation and loss of rent due to damage or tenants simply not paying.

Insurance is a very low cost item for a landlord yet one in five Australian landlords don’t have it, according to a survey by research house, BDRC Jones Donald.

Skimping on insurance? Sure, it will save you a few hundred dollars in the short term, but if you have an issue with your investment property or tenants, not having insurance could result in a significant proportion of your income being wiped out. It’s absolutely not worth the risk.

At McGrath, we recognise that insurance products can be tough to compare and most landlords don’t have the time to trawl through product disclosure booklets to identify which policy is best.  So we got together with a reputable insurer to develop a great insurance offer for our  clients, and it’s one of the most comprehensive policies of its type in Australia.  It covers all the necessary items plus some other situations we wanted included for our clients. This one package costs a tax-deductible $310 per annum. It’s cheap as chips.

Say a tenant leaves without giving you notice.  This insurance has you covered for at least 15 weeks of rent while we find you another tenant (which might only take a few days to a week!). Say there’s damage to your carpet, curtains or blinds – you’re covered with  this Insurance policy for up to $50,000 in repairs minus a small excess. It’s a simple product and gives our landlords peace of mind.

When it comes to damage, you might think “the tenants sound great, they’ve got good references,I feel sure they’re not going to cause malicious damage”. And you might be right. But damage isn’t always malicious.  Accidental damage – including fire, can be caused by even the best tenants, so why would you take this risk? Accidental damage is covered in  this policy, so make sure it’s covered in yours.  

It’s worth also noting that insurance doesn’t just take the form of an insurance policy. Here’s some other ways you can ‘insure’ yourself against costly problems. 

Hire a great property manager who is going to vet your tenants thoroughly.  A mature and responsible tenant with a clean history is unlikely to suddenly stop paying rent or cause malicious damage to your property.  A good property manager will also conduct regular inspections and look for issues that might require small repairs now to prevent a much bigger problem later 

When fitting out your investment property, make decisions that will reduce the impact of accidental damage. Spilled red wine on a white carpet is going to be an issue.  If it spills on a dark carpet, you’re less likely to have to replace it. There are many different types of carpet out there and some are more resistant to spills, depending on the material they’re made of, eg nylon versus wool. Check these things out before deciding what to buy 

Don’t overcapitalise when renovating an investment property.  Say your investment is worth $500 per week.  Don’t spend thousands of dollars on an expensive look that you don’t need for this type of property. A $500 per week tenant is not going to care whether you have CaesarStone benchtops or a great quality laminate benchtop with a CaesarStone pattern.  Before you renovate, talk to your property manager about which enhancements will make the property rent for more and which ones are unnecessary.