The sight of a dark, empty house can be unsettling. Vacant properties in Australia seem to attract trouble, from petty vandalism to outright criminal activity. As a landlord down under, an unoccupied rental property poses risks that go far beyond missing rent checks.
Without tenants, you lose a crucial set of eyes and ears monitoring your asset, for example. And according to official statistics, 1 in 10 homes are unoccupied in Australia, meaning they’re also far more susceptible to burglary than occupied dwellings.
So with all this risk at hand, it only makes sense to invest in something like landlord insurance for a vacant property, right?
Well, yes. That’s the short answer. But there are a few caveats on what this kind of insurance does and doesn’t cover in Australia. So, let’s explore these details.
How Landlord Insurance for a Vacant Property Works
Specialised unoccupied home landlord insurance policy aims to cover dwellings that may be vacant and left vulnerable. These policies can also extend for 6-12 months to handle longer vacancies during major repairs or sales listings.
It’s important to know that this type of coverage is broader than standard landlord policies in Australia, protecting against theft, vandalism, water damage, fire, and more. With an unoccupied property, regular inspections and visible security measures may be required by Australian insurers, depending on the policy and provider you opt for.
As savvy Australian investors know, mistakes can be expensive. Don’t let an avoidable insurance oversight turn into a six-figure lesson. Protecting your vacant rental with specialised landlord insurance lets you rest easier at night, knowing your asset is covered.
Vacant vs. Unoccupied Properties
In the topsy-turvy world of Australian real estate, even basic terminology can trip up seasoned investors. When securing landlord insurance, understanding the difference between a vacant and an unoccupied rental property is essential.
According to industry experts, vacant properties are entirely empty and unoccupied for an extended period of time. Think changeovers between long-term renters or renovations that empty the property.
Meanwhile, unoccupied rentals still contain furnishings, but lack regular tenants residing on the premises. For example, a holiday home sits unoccupied most of the year.
On the surface, the two seem similar. However, insurers apply different rules depending on the vacancy status. For example, standard landlord policies only cover unoccupied properties for 30-60 days on average, while specialist coverage is required for longer vacancies.
If you fail to clarify the correct status, you risk insurance gaps during those extra pivotal moments and the obvious denied claims.
Can You Get Insurance On An Unoccupied Home?
“My investment property will sit vacant for a few months during renovations. Can I still get landlord insurance coverage?”
It’s a common question for Australian landlords facing inevitable vacancies. The answer is yes…with caveats.
Insurers offer unoccupied home coverage to give you an insured property, but policies vary widely in cost, eligibility factors, and protections. Unlike standard landlord insurance, unoccupied clauses require clear communication about vacancy status to avoid denied claims or voided contracts down the road, as we discussed earlier.
Generally, Australian home and landlord insurance cover three core areas: the physical property, liability claims, and even covering just the rental income.
For the rental itself, stolen possessions, vandalism, fire, storm, or flood damage often qualify for payouts to fund repairs. Even utility issues like busted pipes or wiring shortages usually pass muster.
Liability coverage helps landlords avoid bankruptcy if a tenant or guest is injured onsite and sues. With nearly 120,000 Aussies hospitalised for home incidents annually, legal liability cover shields against financial ruin in these situations.
Finally, loss of rental income protection provides vital cash flow when disasters render properties uninhabitable during repairs. For landlords living mortgage payment to mortgage payment, this coverage prevents missed paychecks and rent payments when a crisis strikes.
Most standard policies bundle these three pillars, with optional add-ons like appliance breakdown coverage also available. But the core protections already provide robust shields against the most likely rental property threats.
Is It Worth Getting Landlord Insurance?
In truth, landlord insurance for a vacant property gives a lot of protection that no landlord should go without. And contrary to popular belief, premiums rarely break the bank.
Landlord insurance can provide important protection for rental properties even when they are vacant for an extended period. However, standard landlord insurance policies often limit or exclude coverage after 30-60 days of vacancy.
Landlords can purchase a vacancy endorsement or specific vacant property insurance to maintain more complete coverage. This will protect against risks like vandalism, theft, and damage that become more likely when a home sits vacant.
Premiums for endorsed vacancy coverage or vacant home policies range widely, but typically add only a small monthly cost relative to potential benefits.
While vacancy clauses limit standard landlord insurance policies, options exist to close gaps. Protecting an unoccupied investment property remains affordable for most landlords. Given the risks vacant homes face, maintaining insurance tailored to vacancies provides peace of mind against unexpected property damage and loss. For this reason alone, these policies are always worth it.
What Does Landlord Insurance for a Vacant Property Cover?
Standard policies protect against three key threats:
- Physical property damage – From fires, storms, floods and more
- Liability claims – If a tenant or guest is injured onsite
- Loss of rental income – If repairs render a unit uninhabitable
What’s Left Out?
Like any insurance, some exclusions apply:
- Pre-existing damage – Must occur after policy starts
- Lack of security – Insurers mandate protections like alarms
- Renovation issues – Acts of tradespeople are often excluded
What Does Unoccupied Excess Mean?
In plain English, excess refers to the initial costs a policyholder pays out-of-pocket before insurance kicks in after a claim. All insurers mandate an excess payment from clients on approved cases.
For example, on a standard $500 excess landlord policy, you would pay the first $500 of any claim before the insurer covers the remaining damages. This reduces premium costs but increases short-term expenses when disaster strikes.
Unoccupied excess refers to a separate deductible applied when damage occurs, specifically during vacancy periods. This excess is usually higher than the standard fee – often $2,000 or more. Insurers charge this because empty properties pose added risks, requiring taller financial barriers for clients.
The unoccupied excess only applies while a rental sits vacant between tenants. The lower standard excess would kick in during normal occupancy after claim approval. But leaving an asset empty triggers the pricier unoccupied rates upon damages – another reason to avoid unnecessary vacancies.
The Importance of Notifying Your Insurer
When vacancy hits, the last thing overworked landlords want is another task on the to-do list. Yet it’s extremely important to communicate promptly to insurers before and during vacancies to avoid dire consequences.
Failing to inform insurers of vacancies can result in:
- Claim denial – Unreported vacancies can void policies
- Reduced payout – Insurers cut checks for non-compliance
- Policy cancellation – Too many missteps can mean your insurer cancels your policy.
Don’t skip this simple but essential step. The short-term hassle prevents the major headache of fixing uninsured crisis damage.
How to Get Landlord Insurance for a Vacant Property
So, after all this is said and done, how do you secure adequate, affordable coverage when vacancies arise?
Follow these top tips to get started:
Research Policies Carefully
With so many providers nationwide, the options seem endless. But small print varies widely on issues like:
- Claim processes
We recommend assessing your options carefully and weighing up all the pros and cons. At Duo Insurance, we do all of this legwork for you, so you can rest easy knowing you have the best possible policy for your needs. Contact us to get started.
Evaluate Specialist Vacant Home Products
Standard policies only stretch 30-60 days typically. Try to get a policy that offers tailored products, extending 6-12 months for longer vacancies.
Implement Safety Steps
Insurers mandate security precautions, so you’ll need to ensure you have the following set up and ready to go:
- Alarm systems
- Regular inspections
These measures also reduce risks when properties sit unattended.
Maintain Open Communication
Inform providers of the vacancy status and duration to ensure your policy remains active. Failing to notify means you risk voiding policies down the road.
Here are the key takeaways from the article on getting landlord insurance for a vacant property:
- Vacant properties in Australia face increased risks like vandalism and theft compared to occupied homes. Specialised landlord insurance can provide coverage during vacancies.
- Standard landlord insurance policies often limit coverage after 30-60 days of vacancy. Landlords need endorsements or specific vacant property insurance for longer vacancies.
- Vacant property insurance covers damage from events like storms, floods, vandalism, and theft. It also covers liability claims and loss of rental income during repairs.
- Insurers typically require security precautions for vacant homes, like alarm systems and deadbolts. Regular inspections may also be mandated.
- Failing to notify an insurer about a vacancy can lead to denied claims or cancelled policies down the line. Communication about vacancy status is essential.
- When securing vacant home insurance, landlords need to research policy details carefully regarding coverages, exclusions, and claims processes.
- An unoccupied excess is a higher deductible that applies specifically during vacancy periods, often $2,000 or more. This accounts for the increased risks.