Do I need contents insurance for an IP?

Hi Everyone,

Might be a silly question. Just signed a contract on my first IP. Do I need contents insurance for an IP?

Also its currently vacant. When I try to do a building insurance quote for it most of the time it wont let me due to the property being vacant.

Thanks
Ben

 

Landlord building policies used to cover contents up to about $10k. Allianz is now the only insurer I'm aware of that still includes this (though I haven't checked recently). EBM includes an automatic $50k contents cover, which seems excessive to me.

I used to insure contents for between $10k and $15k, to cover carpets, curtains and blinds, but have found this is prohibitively expensive for the cover you get. I now just insure the building, but I'm comfortable that our tenants won't maliciously damage the contents - YMMV. The only other risks I'm aware of are fire and flooding. I'm interested to see what other's thoughts are.

As for the new IP being vacant, I recommend insuring the building as the owner and confirming with your insurer that you can cancel the policy and be refunded when you get a tenant. Then take out landlord cover from the tenancy start date.

BTW, congrats on your first IP purchase!

 

Essentially no, but good LL policies will have a certain amount of contents cover for the fixtures and fittings in the home.

Any belongings in the home are the tenants responsibility and there are contents policies available for them if they wish.

 

Thanks guys. Will give EBM a go.

@brettc is it possible with EBM to get insurance on a vacant property during settlement and then will have tenants in it after settlement?

 

I wouldn't bother paying for the separate contents insurance, but if it includes some of it that would be ideal.

 

Westpac landlord insurance covers up to 20k contents

 

Do you have any policies with them? Have you ever made a claim and if so, how have you found Westpac?

 

I had difficulty finding them in the City today, definitely worth looking on their site for a branch.

 

Always take out some contents insurance- always. 20K would be sufficient , but it's lunacy not to have it in place.

 

How about for an IP that's a unit within a strata arrangement? The building insurance is covered by the body corp but will you still need a small amount of land lords contents insurance?

 

Carpets, toilet and vanity, dishwasher, curtains, blinds...
I hope this helps

 

I would assume not, but I don't have any units.
Couldn't hurt I suppose.

 

Yeah I have landlord insurance with them. Covers all types of floods and happy with discounted prices. No claims through them though

 

We have just bought a studio within a strata management. We have a small contents insurance policy as we are going to rent it furnished.

 

Definitely a good idea if you're renting it furnished.
Which insurance company did you go with?

 

Hi @GreenGoblin

Congrats on your IP. Where did you buy? I just inspected few properties in Melbourne and shortlisted 2. Now I want to put a written offer for one but with few conditions like building and pest inspection, correct coucil rates and finance condition.

Just wondering did you onvolve convensing or solicitor before putting a written offer or after?

Thanks.

 

Usually you undertake their services after an offer is accepted.
But it's a good idea contacting them before hand to get the ball rolling.

 

Yes you certainly can, we do them all the time. Insurers will have a limit as to how long the property can remain vacant (normally 60 or 90 days) before you have to advise them. They may wish to then increase premiums, not insure, or have increased excesses should there be a claim whilst it has remained vacant.

We wrote our policies a little differently so that you remain covered after 90 days vacancy without advising us but should there be a claim there will be an increased excess. Unlikely you will have that problem though anyway.

Regrading your original question, presuming it's a house you still need to insure your contents, the definition may vary between insurers, but could include things such as carpets, curtains, blinds etc.

In a unit, the landlord policy will generally include contents and MOST IMPORTANTLY your liability. In strata titled properties you need to have either standalone contents as a minimum, or a landlords/contents policy to cover your liability risk.

If you have any other questions feel free to let me know.

Congrats on your first IP.

 

Does EBM classify items as fixture or chattel to differentiate what is falls under building or content?

Fixtures
a fixture refers to any part of a property that is more or less permanently fixed to the land. Just remember that the "fix" in "fixture" refers to something that is "fixed" in place. In general, fixtures include things like the actual house, along with anything that is permanently attached to the house. Presumingly blinds which are permanently fixed are fixtures.

Chattel
A chattel refers to property that is easily moveable and, therefore, not permanent. It is temporary in that it can be moved with ease. If anything, a chattel might only be held in place by the force of its own weight - it isn't necessarily kept in place by any other "permanent" means. Things like fridges, washing machines and dryers are considered to be chattels, since they are often removed from a home when it is being bought or sold.

 

The only correct way to answer that is to refer you to the full Product Disclosure Statement but as an example the definition of Contents is:

Under Section 1 contents means:
a) built in furniture, cupboards, non portable stoves, non-portable electrical equipment, water heaters and coolers and space heaters and coolers,
b) blinds, light fittings, curtains, drapes of every description,
c) floor coverings,
d) your personal property, and
e) general household contents and equipment which is
- not for the tenants use, and
- in an area that is locked and fully enclosed by walls and a ceiling inaccessible to the tenant,
and which are contained in the premises.
Under Section 3 contents means:
a) household goods, blinds, light fittings, curtains, drapes of every description and floor coverings
b) if you own a strata title building, the internal paintwork, wallpaper and any fixture or structure improvement within or attached to that residence which the Body Corporate is not required by law to insure
c) garden equipment if it does not require registration.