As an investor, you need to know the different types of insurance that can protect your investment within the insurance industry. The two of which are general insurance and landlord insurance.
They may sound similar, but they serve different purposes and offer different levels of coverage. In this article, we’ll examine what each means and how it differs.
What is General Insurance?
General insurance is a broad term that covers all sorts of insurance policies that protect individuals and businesses from unexpected events. An insurance company offers these policies, which can include:
- Home insurance
- Car insurance
- Comprehensive car insurance
- Travel insurance
- Product liability insurance
- Professional indemnity insurance
General insurers play a crucial role in the market by adhering to the General Insurance Code of Practice, ensuring fair treatment of customers during policy purchases and claims, and handling complaints.
General insurance coverage protects against losses or damages from accidents, natural disasters, theft, or legal liabilities.
What is Landlord Insurance?
Landlord insurance is a type of insurance for property owners who rent their properties to tenants. It covers the risks of being a landlord, such as:
- Loss of rental income due to tenant default or property damage
- Legal liability for injuries or damages on the rental property
These policies vary but generally include building insurance, contents insurance and liability cover.
How is General Insurance Different from Landlord Insurance?
While general insurance provides broad cover, landlord insurance is designed for property owners who rent out their properties to tenants.
- Landlord insurance covers tenant-related risks like property damage, loss of rental income due to tenant default or property damage, and legal liability for injuries on the rental property.
- General insurance does not cover these risks.
- Insurance contracts for landlord insurance often include specific terms that differ from those in general insurance contracts, reflecting the unique regulatory requirements for rental properties.
- Landlord insurance is tailored to landlords’ specific needs, while general insurance may not cover rental properties. The sum insured in landlord insurance policies typically addresses the maximum amount payable for claims related to tenant-related damages or loss of rental income, ensuring landlords have adequate financial protection.
- General insurance covers more risks for individuals and businesses beyond just rental properties.
Do You Still Need a General Insurance Policy as a Landlord?
You need landlord insurance to cover the specific risks of renting out a property. But you may still need general insurance policies, including business insurance, to cover other parts of your life and business, such as:
- Home insurance for your main residence
- Car insurance for your personal vehicles
- Travel insurance for holidays
- Liability insurance for your business
These policies offer various coverage options tailored to meet your specific needs, ensuring comprehensive protection for different aspects of your life and business.
Landlord insurance is essential for your rental properties, but general insurance policies can cover other areas.
Choosing the Right Policy for You
Landlord insurance provides the specific cover you need as a property investor when insuring your rental properties. Consider your financial situation and the following when selecting a policy:
- What type of property you own (house, apartment, short-term rental)
- Value of your property and contents
- How much cover you need (building only, contents only or both)
- Where your property is located and the specific risks (e.g. flood zone)
- Your budget and the cost of premiums.
It is important to evaluate your financial situation or needs to ensure the insurance products you choose are appropriate for your unique circumstances.
Read the policy terms and conditions carefully to ensure that they suit your situation.
Get in touch with Duo Insurance to see how we can provide a policy that suits you best.
Key Takeaways
- General insurance covers a wide range of risks for individuals and businesses; landlord insurance covers rental property owners.
- Landlord insurance is necessary for property investors as it covers tenant-related risks like property damage, loss of rental income, and legal liability.
- Choose landlord insurance for your rental properties first, and then consider other general insurance policies you may need.
- When choosing insurance, you should consider your specific needs, property details, location, and budget.
- Insurance can provide support during financial hardship, helping you manage premiums and fulfil financial commitments in times of job loss or illness.
FAQs
Is landlord insurance compulsory in Australia?
No, but your mortgage lender may require it.
How do I lodge a landlord insurance claim?
Contact your insurer as soon as possible, provide incident details and documentation and follow their claims process.
Can I claim landlord insurance premiums on my taxes?
Yes, they are generally tax deductible as a business expense. Consult a tax professional.
What is the replacement cost of general insurance?
Replacement cost is the cost of replacing damaged or destroyed property with new property of similar kind and quality, without deducting for depreciation.
What is the actual cash value of general insurance?
Actual cash value is the cost of replacing damaged or destroyed property with new property of similar kind and quality, minus depreciation.
How does my credit score affect my general insurance premium?
Insurance companies may use credit-based insurance scores to determine premiums. A higher credit score may result in lower premiums, and a lower score may result in higher premiums.
What is a waiver of subrogation in general insurance?
A waiver of subrogation means the policyholder waives their insurance company’s right to recover from a third party responsible for a claim the insurer paid.
What is an additional insured in general insurance?
An additional insured is a person or organisation added to an insurance policy by endorsement who gets some protection under the policy owner’s cover.
Can I pay my insurance premiums monthly?
Yes, many insurers offer the option to pay monthly for flexible insurance coverage. This allows you to select your desired level of cover and adjust excesses based on eligible policies, providing convenience and financial flexibility.