Financial Services

Landlord Insurance and Strata – Why Should You Invest in Both?

As a property investor owning both these types of insurance can be very helpful to minimize your losses. Before diving into the details and comparing the two options let’s take a look at a scenario where the need for both types of insurance is highlighted.

Anna owns an apartment in a scheme, and she rents this to Larry. Before renting the unit she thoroughly vets Larry and he is considered a model tenant. All is good for a while until one weekend when Larry isn’t home there is a leak under the sink. This leak continues to rain havoc inside the unit untilLarry comes back home after this short trip. By this time all the carpets are ruined and even the floorboards have absorbed water and swollen.

In order to fix this, the floorboards have to be completely dried out and the warped ones need to be replaced. After completely drying them out the carpets need to be replaced as well. While this isn’t Larry’s fault Anna has to find him suitable accommodation till the job is done.

Luckily Anna has insurance. She has both a landlord policy and a strata policy. Her landlord policy will be able to cover the carpet damage and pay for the replacement. While the pipe and floorboards are covered by her strata insurance. Anna saved a ton of money and everything is well.

This example itself is enough to illustrate why both these types of insurances are much needed by a homeowner or property investor. However, let’s take a look at the two types of policies and compare them.

What is Strata Insurance?

A strata policy will usually be borne by both the owner and the management. In the sense that the premium will be shared. It covers common property and some fixed fittings inside the unit. For example,strata building insurance is a broad product and it doesn’t covera fixed list of things. Each product will be different and make sure you double check your title to know what your policy covers.

Some typical coverage includes impact damage (for example if a drunk driver crashes into your fence or wall), water damage(only a result of broken pipes within the unit walls or kitchen fittings), leaking roofs, fire damage as a result of faulty wiring. Strata insurance also covers common areas in the property like the swimming pool or car park.

What is landlord insurance?

What this does basically is protect your property from things outside your control. It gives you stability and assurance that your income from the properties owned will not be affected by events such as theft of your belongings left inside the unit to be used by tenants, vandalism by tenants or even legal fees as the result of an eviction.

If you have both these types of insurance hand in hand the chance of overlap is quite minimal. If something is covered by your strata policy, it won’t be covered by your landlord policy and vice versa.

It is very important to read the fine print of both these types of insurance so make sure to approach an insurer who genuinely wants to protect your interests and no just rip you off.

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