Landlord insurance can help property owners stay up with rent

Landlord insurance can go well beyond ensuring your investment asset is protected from physical damage.

One threat landlords face is the chance that their tenants may default on rent. Without money coming in when it's supposed to, a positive cashflow investment property can turn into a serious drain on your finances.

Contending with rent arrears

If your tenants do not pay their rent by the agreed upon due date, they are in arrears.

How you should handle such an occurrence depends on local laws based on the state where you live.

For instance, in Victoria, if tenants are in arrears for 14 days or more, you can issue them with a notice to vacate the premises.

While this may solve the problem of a tenant who is refusing to pay their rent, it won't do you much good in the short-term for recouping your losses.

Tracking down disappearing tenants

Another issue landlords must be wary of is tenants who suddenly leave a property without notice, failing to pay rent they owe and often leaving the property in disrepair.

It can be costly and time-consuming to track down these people, adding even more cost and frustration to an already negative situation.

Recovering lost rent with landlord insurance

Fortunately for landlords, rent default insurance can be added to landlord policies.

If you are protected under such a policy, your loss of rent will be covered.

Of course, this is subject to certain limitations. The building must be unoccupied for more than seven days because either your tenant vacated without notice, your tenant stopped paying rent and denies you access to your premises or malicious and intentional damage has been done to your premises.

In instances where tenants turn out to be less trustworthy than you thought, this type of insurance cover can be invaluable.