Property investment can be a great tool for financial success – however, property ownership doesn’t come without risks. You may be wondering what safeguards you can put into place to protect your investment and ensure you’re covered against the unknown, be it damage to your property, compensation claims, issues with your tenants or sudden ceasing of rental income. 

Property owners insurance and property owners liability insurance can help protect you against a whole host of potential risks you face as a property owner. But what is property owners liability insurance? 


Property Owners Liability Insurance

In the event of injury to a tenant, visitor or member of the public on your property, or damage to the property of a third party, you (the property owner) may be found to have legal liability and be required to pay compensation. Property owners liability insurance covers you against any associated fees, including compensation claims and legal costs. 

Property owners liability insurance may be part of a landlords insurance policy bundle in the instance of homeowners. For business property owners, these sorts of claims may be covered under public liability insurance. 

An example of a property owners liability insurance claim would be if the property owner failed to fix a loose step at the front of the property, and a visitor tripped on the loose step and injured themselves. If the injured person seeks compensation, the property owner would be found legally liable, and their insurance policy would cover the associated cost of legal defence and compensation. 

The type of insurance required by a property owner depends on various factors, including the level of cover needed, the cost of the property, and the nature of the investment. 


What does property owners liability insurance cover? 

Inclusions and exclusions vary from policy to policy, so check with your insurance broker to ensure you understand what is covered by your policy. 


What other risks should property owners be aware of?

Rent default

As a property owner and landlord, you rely on regular rent payments. If there’s a pause in rental income – due to rent default by the tenants, or the property sitting vacant – it can be financially stressful. While having a qualified property manager can help with the management of your investment, there’s still the possibility of issues relating to your incoming rental payments. This can be one of the most common and disruptive problems faced by landlords.


Property and building damage

Damage to your property, whether it be accidental or malicious damage, can be very costly to recover from. Even if your tenants take the utmost care in maintaining your property, accidental damages can occur. The result can be expensive repair fees and maintenance in order to get the property back up to scratch. 

Damage can also occur as a result of weather events, or just general wear and tear of a property being lived in. In the event of a severe weather event causing damage, or part of the property wearing out due to the passing of time, the repair bill will fall to you, the property owner. The same goes for water damage and damage caused by fire. 


Vacant property

As well as a loss of rent, a vacant investment property can be problematic for the property owner in other ways. If your property remains vacant for some time, more maintenance may be required before it’s fit for a new lease to be taken out. For example, if your rental property has a garden or pool, these will still need to be maintained even when the property is vacant. 

In addition, a property that is vacant for some time may attract negative attention from people that are aware that nobody is living there.


Property Owners Insurance coverage

Property owners intending to rent out their properties require different levels of insurance than property owner-occupiers. As with every large investment, it’s important to protect your investment property and safeguard against potential financial risks. As mentioned, the inclusions of each insurance policy will be outlined within said policy, but in general, you can expect your property owners insurance to cover: 

  • Property owner liability/public liability cover
  • Malicious damage or theft
  • Accidental damage, water damage and storm damage
  • Rent default and loss of rental income

Property owners and landlords with rental properties face risks unique to their situation, differing from the risks faced by owner-occupiers. To protect your investment, make sure you have a solid property owners insurance policy in place. To find out about commercial property owners insurance or insurance for business properties, get in touch with the team at GSK Insurance Brokers. 

If you still have questions about what property owners liability insurance is, or you want to make sure your investment is adequately covered with your property owners insurance policy, contact one of our highly qualified GSK Insurance Brokers today. 

February 8, 2022

By Graham Knight

Founder and Managing Director of GSK Insurance (established in 1981). Graham draws upon more than 50 years’ experience in the insurance industry, working in both insurance and broking across various private, public and government sectors in Australia.

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