Brought to you by EBM
As a landlord, the last thing you want is to be left out of pocket in the event that your property is damaged by forces beyond your control, and underinsuring your property can prove an expensive mistake.
Underinsurance is when a portion of a property has not been insured, or has been insured for less than it is worth. The Insurance Council of Australia (ICA) suggests that a property is underinsured if an insurance policy covers less than 90% of the rebuild costs.
But how common is it anyway?
Underinsurance is a lot more common than you might think. According to the ICA, eight out of ten homeowners and renters are underinsured for their home and contents, yet 83% say they could not resume the same standard of living if their property was badly damaged or destroyed because they did not have enough insurance.
Spurred on by the notion, “It won’t happen to me,” some owners choose to nominate a lower value than they need in order to reduce the premium, believing it is a cost-saving measure. However, this can be a costly mistake when it comes time to lodge a claim.
Having cover in place is invaluable when things go wrong, but an insurer can only respond to a loss when the right type and amount of cover have been selected.
So what can you do?
When taking out insurance, the first thing you need to determine is what type of cover suits your needs. For example, do you need a policy that covers:
- Building, contents, and tenant-related risks.
- Contents and tenant-related risks, but not the building itself.
- Short-stay accommodation, such as Airbnb.
In addition to insuring a property with the right type of cover, you should also check whether the insured value is adequate for their property.
To limit the risk of being underinsured, you need to confirm the exact value of the building and contents (current full replacement cost, not the original purchase price) and provide that amount to the insurer. If you’re not sure how much the building is worth, you may be able to get an estimate by speaking to a builder, or using an online calculator.
To avoid finding out the hard way that you’re underinsured, we recommend landlords and property managers do their homework when selecting a policy. If you have question, The RentCover team are always on hand to provide guidance.
To find out how to take advantage of your partner reward with EBM, please visit the myProsperity portal.
Article supplied by EBM.
Advice about insurance is provided for your general information and does not take into account your individual needs. You should read the Product Disclosure Statement and Policy Wording prior to making a decision, these can be obtained directly from EBM.
Standard home and contents insurance will not protect against many of the risks that landlords face. Whether it be loss of rent due to an absconding tenant, malicious or accidental damage, or a whole range of other circumstances including tenant hardship, the RentCover range of policies provide peace-of-mind for property owners knowing they are well protected by landlord insurance. And has done so for over 25 years. For more information, or to quote or apply online please visit www.rentcover.com.au