How is landlord cover premiums calculated? When owning an investment property, having a contingency in place is important. Landlord cover is a policies that can protect your investment asset from several potential issues. Having insurance can be a financial safety net in the event of many unforeseen circumstances.
How is landlord cover premiums calculated?
The following is a general list to offer you some insight on why landlord cover can differ among properties. An insurance provider considers many factors when assessing a premium. The provider will use statistics and probabilities to determine the risk of insuring a particular property on behalf of the landlord.
In addressing the probability of a claim, the higher the chance of claim, the higher the insurance premium. This is on the basis the insurer is taking on a higher risk. On the other hand, if the risk is lower to the insurer, the premium will also be quoted lower.
Here are some factors commonly consider when calculating landlord cover premiums:
- The location of the property
- The rental income
- The local crime rate in the area
- The history or future risk of a potential natural disaster (bushfires, floods etc)
- Type of insurance requested. Regarding the investment property these can include
- Building insurance
- Contents insurance
- The sum insured
- The type of property to be insurance (apartment, loft, townhouse, standalone home etc
- The size of the property
- The age and/or condition of the building/property
- The internal fit-out (fixture and fittings)
- Home security system (it may include an alarm, cameras, deadlocks, window locks etc)
- Replacement costs of both the building and contents owned
Many insurance providers can offer reduce the premium for multi-discounts, higher agreed excess, claims history etc. The premium will also include government taxes (like GST), any state or territory duties (like stamp duty) or levies (like the ESL), and administration fees that come with offering insurance.
Are there any other costs associated to taking out a landlord cover policy?
There are many other costs that you will need to take note of. Seeking advice from a qualified insurance broker would be most prudent and sensible. Having the right insurance policy is incredibly important, particular as this is likely to be the most expense investment asset you own. You are likely to be required to pay for government fees (for example – GST, levies, stamp duty to name a few) and administration fees charged by the provider.
Do you want help buying a home?
If you want further assistance about landlord cover premiums, please feel free to contact us. We can connect you to someone who can discuss this in more detail. At Crest Property Investments, we help source properties for buyers. If you’d like to learn more about buying property, please don’t hesitate to contact us. We would welcome the opportunity to help with your property purchase. Our YouTube channel and Market Insights also provide a wealth of information to assist you with many areas relating to property.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
March 2023
