How much liability are you covered for?

[Bangers]

At the moment my Portfolio is a single IP property at 320k in Brisbane (just got into it!)

Regarding Land Lord Insurance. Quick and simple question. Here is a quote I recieved from CGU.

Without Rent default (10m liability)
Annual: $292.07
Monthly: $24.33

Without Rent default (20m liability)
Annual: $319.86
Monthly: $26.66

Is it worth the extra $30 a month?

Thanks,
Matt

 

[TheCamel]

I'd suggest first of all, that the rent default is actually quite important...

To answer your question however, I'm covered for 10M

 

[wylie]

It is not an extra $30 a month, but an extra $30 a year. Whilst you will probably never need it, for the $30 per annum extra, I'd get the higher cover.

Wylie

 

[Bangers]

Reason why I am not choosing Rent Default is because if they suddenly move out, I will immediately move in to satisfy FHOG.

 

[TheCamel]

ok, thats fair enough, but what if they just decide to not pay you rent ?

 

[Mr. Fabulous]

ok, thats fair enough, but what if they just decide to not pay you rent ?

Exactly. Mate, everyone curses their insurance premiums - until they need to make a claim. Then it's all 'Geez I'm glad I had that insurance'.

Mark

 

[Bangers]

ok, thats fair enough, but what if they just decide to not pay you rent ?

If they default, I'll kick them out and move in. If this is wrong thinking, please comment.

 

[GoAnna!]

I think the insurance issue is very different with one negative ip versus say 20ips that are positive. Once you cover yourself for 20 rental disasters it becomes very expensive and very unlikely that you woud have a disaster of that magnititude each and every year. That's how insurance companies make their money! I don't have any landlord insurance - never have. Have had mini disasters (tenants did moonlight dash) which were quickly and cheaply rectifiied.

Yes I do cover the actual building, public liability and rent to cover any insurable incident.

The question is can you live with the consequences of what you haven't insured?

 

[wylie]

Only thing I would add is that "kicking them out" could take several weeks of lost rent. It is not as straightforward as simply "kicking them out".

We had one lot of tenants who decided to stop paying rent. You have to follow the rules and follow the strict timeframe in which the forms have to be given out. In Queensland, no rent for a week, issue a notice to remedy breach. After another week, issue a notice to quit. In the meantime, if they make a payment (even a part payment I think from memory?) you have to start the whole process again. It could take a while if they dig their heels in.

Wylie

 

[TheCamel]

If they default, I'll kick them out and move in. If this is wrong thinking, please comment.

I just don't think it's as straightforward as you might hope.

Maybe your risk profile is different to mine.

How's your risk management procedures? They don't pay rent for a week, i'll kick them out.. thats great.. but.. how are you going to manage the eviction process ?

Do you have a PM, or are you savin money there ?

 

[yo yo ma]

Reason why I am not choosing Rent Default is because if they suddenly move out, I will immediately move in to satisfy FHOG.

Hi Matt
Do the tenants have a lease? Have you claimed the FHOG? If so, will you need to move into the home to satisfy the FHOG conditions?
http://www.osr.qld.gov.au/fhog/eligibility.shtml

You can get online quotes from other companies
http://www.terrischeer.com.au/prop-faq.html
eg Terri Scheer has landlords policy for $255pa in Queensland with 20M public liability... You have to have the property managed by a PM though, can't be self managed. Just do a search & you can get a lot of quotes online.

Related links are
http://www.somersoft.com/forums/showthread.php?t=30374
http://www.somersoft.com/forums/showthread.php?t=33685
Steve

 

[steveadl]

I'm the same, 2 IP's I don't have rent default on. One paid a year in advance so no point, and after having them in there for a year I knew they were good tennants. Same with the next one. I do keep the rent default on my most recent one as I'm still unsure of the tennants and they're constantly late with payments.

It's a case of making sure your comfortable with the tennants before getting rid of rent default. And if you're unsure about them, probably best to keep it until you are.