Updated 28.01.2023

Rental Insurance

Rental insurance options makes property ownership less risky. Also sometimes known as landlord insurance cover.

Quality of tenants determine how easy it is to manage a property. There are problematic tenants and good tenants. Problematic tenants might cause you to loose money in the short term or even in the long run. As such, insurance companies have created landlord insurance options to protect you from such tenants. It also protects landlords against other risks facing property owners

These insurance products covers both investment and landlord’s income. Experienced landlords know that it is crucial to have a landlord cover. It protects them from rent defaults, break-ins, and accidental property damage.

What is a Rental Insurance?

Rental insurance is an insurance policy product that specifically caters to landlords renting out their properties to generate an income. These insurance policies typically cover multiple unfortunate events that could affect your investment or income as a landlord.

Should I Get a Rental Insurance?

Yes, you should get rental insurance. Recent times laws in South Africa favor tenants. As a consequence, many tenants take advantage of this, pushing things to the limit while exercising their lawful rights. As a landlord, it is essential to protect yourself if such a situation arises.

Landlord insurance can also protect you against extreme weather conditions that might cause loss or damage to your property. These may include tsunamis, earthquakes, floods, or storm. You will also be protected against other disasters such as explosions and fire.

With landlord insurance, your property will also be covered against loss or damage caused by vandalism, theft, or burglary. 

How Does Rental Insurance Work in South Africa?

Rental insurance works in different ways depending on your preferred insurance company. This is how it works.

  1. The insurer will collect rent from the tenant on behalf of the landlord. The company will then pay out automatically if the tenant defaults on payment.
  2. A landlord collects rent from the tenant. The insurer pays out upon receiving notification that the tenant has defaulted. This payment will be completed after a specific period, usually between 2 to 30 days. The duration depends on the specific insurance policy at hand and the insurance company.
  3. The cost of the landlord insurance policy is linked to a percentage of the rental property being charged. But the policies limit the cover to a certain number of months. Even so, there are insurance companies that cover the landlord for a specific amount. These landlord will continue paying out until that amount is claimed.
  4. Insurance companies may also indicate the monthly rental that they are willing to cover. In several cases, insurance companies declined entering into agreements if the rental property income is below a certain amount. Some insurers go to an extent of vetting the tenants themselves to authenticate before they provide landlord cover. Their vetting procedure includes checking a tenant’s bank and credit records and contacting their employer. 

Landlord insurance in South Africa also covers the cost associated with evicting a tenant when push comes to shove. Legal costs are often high, and most times crippling. Tenants are aware of their rights and may refuse to vacate the premises until the case is heard in court. 

What Should a Rental Insurance Policy Include

  • Storms – Storms are natural disasters that can occur unexpectedly. Landlord insurance should cover storms. It should also cover storm-related destructions such as damages on your property resulting from a fallen tree.
  • Fire- They should cover damages and losses caused by fire, including bushfires.
  • Contents- If you have kept any items or furniture at the property, you may get content cover.
  • Theft- This covers the proprietor in case of theft or vandalism on the property.
  • Floods- This is included as standard by some insurance companies, while others will require you to pay extra.
  • Loss of rent- It covers lost income if your tenant defaults on rent payment.

What is Not Covered?

  • Defects – Inherent defects such as faulty materials or design, poor workmanship, or structural defects are often excluded from the cover.
  • Wear and tear – Wear and tear resulting from lack of maintenance, end of a lifespan, gradual deterioration, or depreciation are not covered.
  • Illegal contents – Personal effects or illegal contents which are illegally held or acquired illegally are excluded from the cover.
  • Soil movement – Soil movement resulting from soil erosion, mudslides, landslides, or subsidence is also excluded from the cover, unless it is directly caused by an explosion, tsunami, flood, storm, or earthquake, and occurs within 72 hours.

Rental Insurance Options 

Landlord insurance is available in three options

Home Insurance

Home insurance also referred to as building-only cover, covers your property and the fixtures present on your property against damage from vandalism, theft, storms, and fires. This cover also offers additional insurance against loss of rent resulting from damage that has rendered the property uninhabitable. Building insurance is structured to protect the fixtures and physical structures that constitute your building: These include your property itself, fences, garage, paved driveways, and even built-in appliances such as hot water systems, air conditioning systems, showers, and baths, among others.

Contents Insurance

Contents insurance covers any of your household belongings and any other possession that you might have on your property against the same risks as your home insurance. This cover usually allows additional options for communal items such as your outdoor furniture, pool equipment, and even your BBQ appliance.

Both Home and Contents Insurance, Bought as a Package

Both home and contents insurance bought as a bundle provide complete protection for your entire property and everything on it. It is the most comprehensive level of proprietor insurance coverage that is available for property owners. It also comes with an additional cover. The optional cover for both rental default and loss or damage caused by tenants and/or their guests.

How do I Compare Rental Insurance Policies?

The simplest way to compare different landlord insurance policies is by using price comparison sites. Doing this makes finding the right policy provider easy. Do this by filling your rental property’s details. The site’s will automatically source the best policy quotes that suit your needs within no time.

By acquiring landlord insurance, you’ll be protecting your income and investment on all fronts, giving you much-needed peace of mind.