Investors Must Double-check Insurance Policy
As a landlord, you would definitely want to cover yourself for damage caused by malicious intent of the tenants. However, would you want to forego cover for accidental damage? Not really! This is why it is crucial that investors (read landlords) do not take a bargain, sub-standard insurance for themselves.
Damage caused by malicious intent of tenants or by accident
If tenants are unhappy with your property manager or they are not too keen to be thrown off your property, they may vent their anger by causing damage to the physical premise. This said, they can accidentally leave the tap open causing a mini-flood and subsequent water damage, too. So your policy must be one which has maximum endorsements and minimum exclusions.
Check the lease term
Landlords must also take into account the lease term for month-to-month tenancies. In all the cases except the fixed-term tenants, it is wise to know what losses you can rack up if your tenants choose to live on your premises beyond the lease agreement. Also, you will do well to prefigure if such a situation is covered in your insurance policy.
Figure out if arrears is covered
As an investor, be guarded against arrears that defaulting tenants can quickly amass. An indemnity that covers for the arrears is welcome and arrear, in this context, should be defined as a 2-month default by tenants.
Property investors must not be under the impression that professional property managers will cut out every possible risk of loss. Yes, the really smart ones substantially minimise losses but you still need a handsome insurance policy to guard you in totality.
Do you effectively screen your tenants?