Most people view insurance as an option rather than a necessity. Unfortunately, this decision will cost them much more than they had anticipated.
When it comes to home insurance, landlords especially stand to lose much more from the lack of sufficient coverage.
Some of the issues faced by landlords include rental loss, theft, malicious damage by tenants, runaway tenants and other violations.
We’ve all seen furious landlords grouch in anger at their tenants – furiously repeating themselves of the house rules, prohibitions and limitations in the tenancy agreement. Almost all the time, in vain.
However, there is good news for landlords.
We are all aware of the various types of home insurance in Malaysia. They provide coverage for:
- Basic fire policy
- Houseowner policy
- Householder policy
There is also one specific insurance coverage that safeguards the right of landlords – landlord insurance.
What Is Landlord Insurance?
Landlord insurance is a type of policy that covers property owners from financial losses within their rental properties. This coverage ensures that landlords can protect their rights and interest if and when the situation arises.
What Does Landlord Insurance Cover?
1. Rental loss
You can suffer a loss of rent in several ways. One among them is caused by property damage, brought on by flooding or storms.
As this makes the property unlivable for some time, landlord insurance has you covered. Especially if you are able to provide solid evidence, including the exact rental loss.
2. Rent default and theft
We have heard horror stories of tenants making away with furniture and appliances. And some skipping rent payment altogether (either due to changes in financial situations, or simply playing truant).
In these problematic circumstances, landlord insurance can be a lifesaver.
3. Malicious damage
Wear and tear of a rented property are normal and expected. However, damages beyond the norm – vandalism or even significant damages (from an out-of-control party or over-enthusiastic children) can be challenging to face.
And what more, rather expensive to fix, unless your tenants are willing to pay for damages. In these instances, landlord insurance will allow you to claim your financial losses.
4. Legal costs
Issues of delayed rent payment that can’t be solved with honest conversation would sometimes require legal intervention.
However, engaging a lawyer to issue a letter of demand for unpaid rent, and compensating their professional fee can be difficult to navigate.
In these situations, the insurance is able to provide additional cover for legal expenses.
5. Home fixes
Sometimes the issue isn’t the tenant at all – but simply an old pipe burst, faulty wiring or even breaks-ins.
Having landlord insurance covers you for such risks. And because of the vague nature of the issue, it also eliminates the “who is responsible for the damages” debate between landlord and tenant.
6. Mortgage loan instalment protection
Similar to the personal accident insurance, this coverage ensures that landlords are protected if the property is declared temporarily unlivable (accidental death or permanent disablement).
In such a situation, the insurance will cover a 6-month mortgage instalment or a benefit amount.
7. Public liability
This is perhaps the most important benefit of landlord insurance (especially for commercial properties or property with common areas).
As the landlord, it insures you against any occurrence of injury or death on your property. This is especially so if the tenant, who had sustained the injury or loss, is intending to take legal actions against you.
Do You Need Landlord Insurance? And If So, What Can You Do Now?
If you’re a landlord, you should not be without landlord insurance. A tenancy agreement can only go so far and do so much for you.
To ensure and safeguard your full rights as a landlord, landlord insurance should be part of your portfolio, by default.
If you’re wondering what a landlord insurance looks like and for further information on what it can do for you, here’s an example from Allianz*.
*Editor’s Note: This is not a sponsored post, we are just citing an example and we are not affiliated to Allianz in any way.
It’s important that you do your research and due diligence, and pick one that is right for you; based on the coverage, cost, location etc.
Once you have identified one that meets your needs, make sure you protect yourself. If the above circumstances were to ever occur, you can rest assured and breathe easy.
For more helpful tips and guides on renting out properties in Malaysia, check out our dedicated section on the A-Zs of rental properties and personalized guides for landlords and tenants!
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