Insurance is one of those things that some people mistakenly think isn’t worth the cost. Unfortunately, that’s why too many people choose not to take up appropriate insurance cover to insure their assets as well as their incomes.

When it comes to insuring their homes, most Malaysians only chose to insure because of bank requirements due to mortgages.

And for strata-titled properties, building insurance is included in your owners corporation or body corporate fees so owners just need to ensure they have adequate cover for their property’s contents. Even that, most owners choose not to do so.

One specific type of insurance is not on the radar of all property investors – but it should be.

Landlord insurance covers property investors for a variety of events that can result in a financial loss to you.

Plus, it’s tax-deductible, too.

While landlord insurance policies can and do vary, there are a number of inclusions that are usually standard or optional extras.

1. Rental Loss

You can insure your investment property for loss of rent, but that doesn’t mean during periods of vacancy. (Both for commercial properties as well as residential properties with different insurance company in Malaysia)

Rental loss is when your property is damaged, perhaps by a storm or flood, and it is uninhabitable for a period of time.

You can insure your property for such an event, but you must be able to provide evidence of everything, including the exact rental loss that you have experienced.

2. Rent Default and Theft

Unfortunately, sometimes a tenant’s financial or personal circumstances change and they can morph from an ideal tenant to a worrisome one.

Sometimes they may stop paying rent for 2 months and more with all sorts of excuses and then by the time you manage to contact them, they’ve already left the place and left you with a lot of outstanding utility bills such as TNB, Syabas, IWK and telephone bills.

A landlord insurance policy can cover you for rent defaults in such a circumstance.

It can also provide coverage for theft, such as if that tenant also took white goods with them, because your property was partly- or fully-furnished.

3. Malicious Damage

During your property investment journey, your portfolio will need to be constantly maintained because of the wear and tear of tenants living in them.

Of course, tenants are protected from paying for normal wear and tear under the tenancy agreement.

But sometimes damage (that is not normal wear and tear) can be done to your property – in fact, it’s malicious or even vandalism.

Perhaps your tenants hosted a party that got out of hand and significant damage to the walls was sustained or the kids of the family dug holes in the wall for certain unknown reasons and etc.

In that instance, unless your tenants are prepared to pay to have the damage remedied (but you’ve probably given them notice to leave anyway), you can claim for your financial loss through an appropriate landlord insurance policy.

4. Legal Costs

Appointing a lawyer to issue a letter of demand for the outstanding rents is the first step by the landlord. However, for a layman landlord to engage a lawyer and pay for the professional fee might not be as simple as one can imagine.

The landlord insurance policies can provide additional cover for legal expenses incurred in remedying an issue with a tenant, such as issuing legal costs for the letter of demand (up to twice a year).

5. HomeFix

Older buildings also face situations such as burst pipe, theft and etc. With a small premium that only costs below RM100 per annum, you can cover the above risk and have peace of mind especially if it is an investment property whereby the landlord is not staying nearby.

The coverage will come in handy and reduce the argument on the cost of repair between the landlord and tenant.

6. Mortgage Loan Installment Protection

Mortgage loan installment protection is a coverage for Malaysian landlords whereby in the event there the residential properties are deemed temporarily uninhabitable or the landlord is unfortunately met with accidental death or permanent disablement, the insurance will come in place to cover a 6-month mortgage installment or a benefit amount (there is some similarity with personal accident insurance but the benefit is to cover the mortgage).

7. Public Liability

One of the most significant benefits of landlord insurance is its public liability coverage, especially commercial properties or property with a common area.

Most policies should provide coverage that insures you against events such an injury or death that occurred at your property.

This is an insurance for you as the owner in cases where the tenant or a visitor injures themselves (or worse) at your property and decides to take legal action against you.

The bottom line is that landlord insurance should be a part of every property investor’s portfolio.

It’s always advisable to double-check the fine print to ensure the policies cover you for the basics, plus any additional extras like flooding and etc.

While landlord insurance policies do vary, they usually only cost a few hundred ringgit a year, which is a very small price to pay for peace of mind, don’t you think?

Written by Mr. See Kok Loong (pictured above), Executive Director of Metro Homes Realty Berhad (Registered Estate Agency firm) and Propdone Sdn Bhd (General Insurance Agent with Allianz Malaysia)

(8 October 2020)