08 Dec 2017

Insurance - How to Make Sure Your Property is Insured for Replacement Value

When discussing insurance, it’s all too easy to shrug your shoulders and wave it off with a casual ‘she’ll be right’ attitude. However, your home and contents are likely to be the most valuable assets you own, so having a current and comprehensive insurance policy is vital. But what about investment property insurance? How do you know if your insurance policy is enough to cover the replacement costs of unfortunate damages? These aren’t things anybody likes to think about, but putting in a little time to address it now could potentially save you thousands in the future. Here’s what you should know about securing the right investment property insurance for your needs:


Ask a professional

Knowing what price a home and its features are worth is a skill only learned with experience. For this reason, it’s advisable to get an agent to help you determine a replacement cost rather than attempting a self assessment. The costs can vary greatly depending on specific features and inclusions, so if you aren’t quite sure of the value of what you’re looking at, you could risk losing a lot of money. A house that’s under-insured is going to cost you dearly in the event of a replacement, and a house that’s over-insured will hurt your pocket in unnecessary payments.


Is the amount fair?

On average, Aussie homes cost between $1000 – $1200 per square metre to build but that can be much more in higer end properties. Of course, there’s more to a home than just basic structure, so you’ll need to account for extras such as carpet, blinds, air-con, marble benches etc. If you have done any recent renovations or made certain changes to the property, it’s a good idea to reassess the value of the home as this will certainly affect the cost of your investment property insurance.


Find out exactly what your policy covers

Not all insurance policies are created equal. There are some compulsory components and sometimes a homeowner can assume this includes certain extras that are actually policy add-ons. Getting caught out here could have disastrous consequences if you don’t read the fine print.


Landlord insurance

Investment property insurance, or landlord insurance, strictly pertains to owners of a rental property. If you rent out your home, there are additional risks to your property that you should cover to protect your investment. It is smart to get insurance in case of fires, storms and natural disasters, but you should also protect yourself from financial loss due to theft, damage to your rental property by tenants, loss of income due to unpaid rent, or legal expenses if you take a bad tenant to court. However, there are different types of landlord insurance, so check for conditions in your policy which suit your circumstances.


Key takeaways

The bottom line is that investment property insurance is not a ‘one size fits all’ arrangement. To make sure your home is insured at replacement value, get a professional – like a real estate agent – who has plenty of experience in this area. An asset of this much value is too precious to leave to chance.


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