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Two Insurance Policies No Landlord Should Ignore

Wednesday, June 1, 2011

By this time you probably realise it is essential to have adequate building and contents insurance for your property. I go into a little more detail about how to assess your insurance needs in my eBook 10 Steps to Conquer the Property World. But today I want to review two other types of insurance that are commonly overlooked by Landlords: Rent Guarantee Insurance and Income Protection Insurance.

Rent Guarantee Insurance

This insurance policy guarantees your rental payments if the tenant fails to do so. Basically what happens is the insurance company will check the tenant’s identity, references, income and credit so they can assess whether or not the tenant is suitable to cover. So you will want to go through this process beforeyou actually rent to the tenant, otherwise you may not be able to go back and acquire insurance for him or her.

Once insured, should the tenant fail to pay his rent, the insurer will pick up where the tenant left off and pay the rent to you (or your letting agent). If and when an eviction is necessary, the insurer’s legal department will handle this process for you.

Income Protection Insurance

This insurance covers your own personal income, or at least a percentage of that income should you lose your job or become sick where you cannot carry on your trade or self employment.

The value of this insurance is to protect you when you are in a situation where you cannot earn anymore. Life doesn’t stop, you still have to pay your own outgoing expenses such as your personal home, or in this case the mortgage for an investment property. When this happens you want to try to cover as much as your income as possible until such time you can come back to work. There are even policies that can extend through your retirement years.

So be sure to look further into these two insurance options. You can get specific quotes from your financial advisor or your mortgage broker if they offer protection policies, as well as a good letting agent should be able to assist you.