Landlord Insurance

What does landlord insurance cover?

Landlord insurance offers a broad range of protection across three critical areas: loss of rental income, damage to building and damage to contents.

What additional benefits are available?

As well as the items listed above, landlord insurance policies offer a range of additional benefits to suit a landlord's unique needs. These include the following:

• Legal expenses. If the insurer has accepted a claim for loss of rent, your policy can cover the legal expenses you incur when attempting to reduce your loss, or if you have to organise a legal defence.
• Representation expenses. If your property manager represents you in court or at a tribunal hearing, your insurance covers their representation fee.
• Sheriff/bailiff fees. Covers the cost of engaging a bailiff or sheriff to evict a tenant.
• Tax audit costs. If the ATO or another government authority conducts an audit of your financial affairs, landlord insurance can cover the professional fees you incur as a result.
• Legal liability cover. You’re covered for legal liability if you’re at fault when a tenant or another party dies or suffers a bodily injury at your property, or when someone else’s property is damaged.
• Replacement of locks. If a tenant is evicted by court order and you need to change the locks, landlord insurance can cover this cost.
• Removal of tenant’s possessions. If a tenancy has ended and you’ve made an insurance claim for loss of rent, your policy may cover the cost of removing the tenant’s possessions from the property.

What impacts the price you pay for insurance?

Landlord insurance costs are influenced by a number of factors, including:

• The value of your building and contents. Ultimately, the more you insure your building and contents for, the higher your premiums will be.
• The type of property. Freestanding homes will usually cost more to insure than apartments in apartment buildings since they're generally exposed to more risks.
• The building materials. Building made with sturdier materials like concrete will be cheaper to insure since they're less likely to be damaged.
• Where the property is located. Homes in riskier areas like high-crime neighborhoods will cost more to insure that similar homes elsewhere since they are more exposed to certain types of risks.
• The landscape. Other unique factors about your property will factor into your risk profile. For example if you're surrounded by tall trees, you might be at risk of impact damage.
• How secure your property is. Having strong security features like deadbolted doors and an alarm system can help bring your costs down since they will prevent certain types of claims.
• Your claims history. If you've previously made multiple claims on your landlord insurance policy, you can expect an increase in the cost of cover in the future.
• Any additional options you choose. If you choose a policy with extra features like tax audit cover and cover for your legal fees, you can usually expect to pay a little more.

The easiest way to estimate your costs is to compare landlord insurance quotes from a few different insurers.

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Why do I need landlord insurance?

• It protects you against risks faced by landlords. As a landlord, you’re exposed to a range of unique risks that don’t affect ordinary homeowners. The best landlord insurance provides the financial protection you need to look after your investment property.
• It provides peace of mind. In many cases, the security bond won’t be enough to cover you for tenant-related losses. Landlord insurance is designed to guarantee that you won’t be left out of pocket when something goes wrong with your property.
• Your premiums are tax deductible. Landlord insurance is classed as an investment expense, which means that the premiums you pay towards your policy can be claimed as tax deductions.
• Cover is available for short-term rentals. Landlord insurance doesn’t just cover long-term tenancies; there are also policies available to cover short-term rental arrangements, such as renting out your property through websites like Airbnb or Stayz.

What should a body corporate cover?

If your investment property is in a strata-titled building, as it might be if it’s an apartment or a unit, it’s important to be aware of what situations are covered by your landlord insurance, and what falls under the residential strata insurance policy.

Also known as body corporate cover, residential strata insurance covers the common property managed by strata or the body corporate. This means it provides cover for loss or damage to the following:

It also covers contents located in a common area, such as:

However, the exact list of items and areas covered varies between insurers, so check the policy's product disclosure statement (PDS) for full details of the cover provided.

What exclusions should I be aware?

When you compare the best landlord insurance policies, make sure to take a close look at the list of general exclusions. These are situations and events which the insurer will not cover, such as:

Read the PDS closely for a full list of general exclusions.

How to choose the best landlord insurance policy

Landlord insurance may seem complex and confusing, but keeping a few simple tips in mind can make it a whole lot easier to select the right cover:

• Check that pet damage is included. Not all policies cover damage caused by pets owned by tenants or their guests. Check the fine print to find out whether or not this is the case.
• Cover while untenanted. It’s also a good idea to check whether you will still be covered if the property is left untenanted for an extended period. You may have to satisfy specific conditions to ensure that cover remains in place, such as actively seeking a replacement tenant.
• Building-only versus combined cover. If you’re renting out a fully furnished property, contents insurance is a must. However, if your property is unfurnished, you may decide you don’t need it. Just remember that carpets, curtains, internal blinds and a range of other items are only covered by contents insurance, so you may still be better off with a policy that provides combined building and contents cover.
• Shop around. Compare several landlord insurance policies to see how they stack up against each other. Obtain quotes for each suitable policy so you can select the best one available.

Do policies cover me against damage caused by tenants’ pets?

Landlord insurance is not designed to cover damage caused by tenants’ pets. However, you can still find a limited level of damage cover, and liability cover for injuries caused by animals kept on the premises.

Generally you are limited to specific types of damage cover, and insurance for damage caused by pets that are deceptively kept on the premises in breach of the tenancy agreement.

For the most part, landlord insurance is not designed to protect against damage caused by pets outside of liability cover, which can insure against injuries caused by pets to visitors. Any cover for damage caused by pets is typically restricted to specific ornamental items that have been knocked over by pets. Or a policy might include a limited amount for damage caused by pets that were kept on the premises without your knowledge, when specifically prohibited under the tenancy agreement.

Who offers landlord insurance in Australia

Here are some of the insurers who offer landlord insurance in Australia:

FAQs

• Q. Is landlord insurance the same as building insurance?

  A. Landlord insurance generally covers events that lead to the loss of rental income, damage, or theft from your property. Building insurance protects against damage to the property’s structure. For more information on building insurance, read our comprehensive guide.

  Building insurance isn't compulsory, but if you own the building you're making a huge gamble if you don't have it insured. Most policies let you add on cover for your building if you're getting landlord insurance.

• Q. Is landlord insurance compulsory?

  A. No, there is no legal obligation for a landlord to take out insurance. However, some lenders require you to take out a policy before approving your application for a loan.

• Q. Is landlord insurance tax deductible?

  A. Yes, in most cases you can claim your landlord insurance premiums as tax deductions.

• Q. When should I take out landlord insurance?

  A. Don’t wait until you experience a problem with a tenant to think about purchasing cover. The best time to buy a policy is immediately after you settle on your investment property.

• Q. Does landlord insurance cover legal costs if I take a tenant to court?

  A. It depends on the policy; not all insurers cover legal costs. Read the PDS closely for full details on what your policy does and does not cover.

• Q. Does landlord insurance cover extended vacancy?

  A. Except for situations where a tenant breaks the terms of a lease, landlord insurance typically will not provide any cover for periods when your property is untenanted.

• Q. What happens if I, as the landlord, decide to move into the property?

  A. If you decide to stop leasing out your property and use it as your primary place of residence, your landlord insurance policy is no longer valid. You should inform the insurer of your changing circumstances as soon as possible, and choose a home insurance policy to provide the protection you need.

• Q. Will I be covered if my tenant sublets?

  A. Subletting can be tricky when it comes to landlord insurance. You may have some cover for the building, you probably won't be covered for damage to any contents - if the place is furnished, but you definitely won't be covered if the subletting tenant doesn't pay rent.

• Q. How do I cover my granny flat?

  A. If you own a granny flat and are leasing it out for some form of income, then landlord insurance should work for you.

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