It is a necessity for property investors to have adequate landlord insurance to provide financial security against the potential risks of property ownership and leasing, such as rent defaults and damage or theft by tenants. According to the latest research by Canstar, Australia’s biggest financial comparison website, landlord insurance looks to be on the rise.
It is a necessity for property investors to have adequate landlord insurance to provide financial security against the potential risks of property ownership and leasing, such as rent defaults and damage or theft by tenants.
However, many investors who have been hit hard recently by rising interest rates are now likely to be dealt another blow as the cost of landlord insurance looks to be on the rise, according to the latest research by Canstar, Australia’s biggest financial comparison website*.
Canstar’s 2017 Landlord Insurance Star Ratings research has determined landlord insurance premiums for building and contents cover have increased on average by 20% year on year in almost every state.
The following tables show the average annual landlord insurance premium year on year for each of the different states for houses and units.
Landlord insurance premiums have risen the most in Western Australia, with the average yearly premium increasing year on year by 25% to $967 per annum. At the other end of the scale, New South Wales has the lowest increase of all the states, increasing by 16% year on year up to an average of $1,272 per annum.
This year, Queensland – excluding North Queensland – is experiencing the highest annual cost, with the average premium being $1,414 per year. This could be due to the higher cost of construction being reported in the Sunshine State.
Rising insurance costs can make a significant dent in rental income, making it more important that property investors shop around for the best value cover possible, while being wary of exclusions.
Insurance is a significant cost to landlords
Landlord insurance is a substantial yet necessary cost for property owners. To give an indication of the significance of the cost, Canstar has compared the insurance premium on cover for a $450,000 replacement value house against the median annual rental income. The premiums as a percentage of gross rental income are within a range of 5% to 7%.
For units the cost is nowhere near as significant, with the body corporate bearing the cost of building cover.
Who offers outstanding value when it comes to landlord insurance?
Canstar has obtained 3,800 quotes and assessed 46 products from 41 insurers, to determine which providers are offering outstanding value to property investors.
After extensive analysis, Canstar is pleased to announce that Elders Insurance and Suncorp have won the 2017 Outstanding Value Landlord Insurance Award.
One of the main drivers of Elders’ award-winning performance was its competitive pricing; for each state and region considered, Elders’ premiums were below the market average. Elders also has a very strong feature offering for both units and houses in the states and regions considered.
Based on Canstar’s Landlord Insurance research, Suncorp maintains below market-level premiums in every state except Queensland, and its premiums cost well below the market average in Western Australia, where it is a price leader. Suncorp Landlord Insurance also has an excellent range of features on offer, particularly when it comes to burglary, damage, their claims process and storm cover as well as building and contents inclusions.
To learn more about Canstar’s 2017 Landlord Insurance research and the winners pricing and features: https://www.canstar.com.au/star-rating-reports/landlord-insurance.
Original article: http://www.apimagazine.com.au/property-investment/landlord-insurance-premiums-up-by-20-percent