One of the biggest financial investments you will make in your lifetime is purchasing property. The expectation of long-term returns, potential appreciation and usually a reliable rental income stream gives investors peace of mind. But, like any other massive investment, there is always an element of risk involved. Some people choose to not take out investment property insurance to try and save money, but this can end up costing you financially in the future.
Natural Disasters Aren’t As Rare As You Think
Australia is a country that’s no stranger to natural disasters. Bushfires can wipe out huge expanses of land, and floods can destroy homes and properties. Our country’s geography and climate mean that when it comes to nature, you need to expect the unexpected.
Without investment property insurance, you’re leaving your most valuable asset exposed to potentially catastrophic damage. Imagine owning a property in an area prone to flooding and being left with a repair bill worth hundreds of thousands of dollars after severe water damage. Insurance isn’t a luxury, it’s an essential form of protection that could literally save you from financial ruin.
Protect Yourself Against Tenant Disputes
Owning an investment property usually involves renting it to tenants, which comes with some risk. No matter how thoroughly you screen potential renters, problems can still come up. They might stop paying rent, leave unexpectedly or damage the property. Investment property insurance generally protects against these situations so that you don’t have to pay out of pocket for a costly eviction process or repairs.
Property Damage – It’s More Common Than You Think
Even if your investment property is in a secure and tidy neighborhood, wear and tear is inevitable. All properties age, and sometimes unexpected repairs come up. From minor plumbing leaks to serious roof damage—these types of repairs can really start to build up. While your main homeowner’s insurance policy might cover some of these damages, investment property insurance is created specifically to protect you from risks associated with rental properties. It can include things such as structural damage, theft or vandalism—meaning you won’t have to drain your savings account just to cover some expensive repairs.
Legal Liabilities: What If Someone Gets Hurt?
As a property owner, it is your legal responsibility to provide a safe environment for your tenants and anyone visiting the property. If someone is injured on your property, you could be held responsible for medical bills and attorney fees, and without investment property insurance this could mean paying thousands of dollars out of pocket. Insurance can help cover these legal responsibilities and protect your savings.
Don’t Gamble With Your Financial Future
Skipping investment property insurance to save money may seem like a good idea in the short term, but it’s a gamble that could cost you big time. The price of coverage is usually minuscule compared to the financial risks you take on without it and the peace of mind that comes from knowing your investment is covered, no matter what happens, is priceless.
At the end of the day, insurance is protecting yourself from risk. You’ve made a great investment by investing in property, don’t stop there and make sure you continue to invest wisely by protecting your investment. In a country like Australia where risks are abundant from every angle, investment property insurance is not just a good idea, it’s a necessity for longevity and security.
