The importance of understanding insurance policy calculations.

As a landlord/property investor, understanding how insurance premiums are calculated can save you thousands of dollars.

Several factors are taken into consideration when landlord insurance is calculated, including:-

● Property Location - Areas prone to higher rates of natural disasters, crime and location characteristics play a big role in influencing premiums.

● Property Age & Condition - Insurers may consider older buildings and those in need of repair to be higher risk, possibly resulting in a higher premium.

● Property Type - Residential properties may have different risk profiles compared to commercial properties. Insurers will adjust premiums accordingly.

● Occupancy Rate - Properties with higher occupancy may be considered lower risk as they usually have a continuous flow of income to cover expenses like premiums.

● Claims History - If a landlord has filed multiple claims in the past, insurers may see them as a being of a higher risk.

● Additional Coverages - If a landlord requires additional coverages on top of their standard landlord insurance policy, e.g. liability protection, natural disaster coverage, & other such coverages, they will typically increase the premium.

It is important to understand the best insurance for your needs, to ensure you have selected the right insurer, and that your premiums are competitive. We advise all of our property owners to seek professional advice on the appropriate insurance best for their short-term rental requirements.

According to the Insurance Council of Australia, an estimated 80% of Australian landlords and homeowners are underinsured.

Understanding the different types of insurances available to you as a property owner is really important to ensure your asset is protected. It’s always a good time to review your various insurance policies and ensure you are properly protected.

Here’s what you need to know. Home insurance and landlord insurance both protect the asset, but the devil is in the details.

Home insurance is designed primarily to cover the risk associated with living in the house. In contrast, landlord insurance is tailored specifically with a rental property and/or investment property in mind, and protects the owner for tenant-related issues such as non-payment of rent, & damage to property caused by tenants.

Stay tuned for more on understanding insurance, ‘The importance of understanding insurance policy calculations’.