In this article:
  • What is landlord insurance?
  • What does landlord insurance cover?
  • What does it not cover?
  • What is liability cover?
  • How much does landlord insurance cost?
  • How to claim landlord insurance
  • How long does the claim process take?

What is landlord insurance?

Landlord insurance is a type of insurance policy that protects those who own investment properties from the risks that come with renting it out. Typically, landlord insurance covers investors from loss or damage caused by insured events and loss of rental income.

Landlord insurance can apply to all sorts of investment properties, including a house, unit, apartment, or townhouse.

Many general insurance providers offer landlord insurance in Australia. There are three components of landlord insurance:

  • Building insurance – covers damage to the property’s structure
  • Contents insurance – protection against damage to assets inside the property e.g. appliances
  • Loss of rental income

Landlord insurance can be an invaluable feature to consider if you ever purchase an investment property. Adequate landlord insurance will minimise the risk of being liable for any damage caused by tenants, saving you both time and money.

What does landlord insurance cover?

Landlords will have the option to purchase landlord insurance, building insurance, and contents insurance.

A landlord insurance policy may cover some or all of the following:

Tenancy cover

  • Damage or theft by tenants or their guests
  • Loss of rental income
  • Rent default
  • Legal expenses in the event that you have to take tenants to court or tribunal
  • Liability

Building cover

Building cover will protect against damage to the building structure (including pipes, cables, external awnings, external structures, gas and plumbing, and fixtures and fittings) in the event of:

  • Fire
  • Lightning strikes
  • Storm damage
  • Flooding
  • Tree falls
  • Earthquakes
  • Explosions
  • Vandalism
  • Impact damage (if a car crashes into the home or in the event of a break-in)
  • Water damage

Contents cover

If you are renting out a furnished home, additional contents insurance can protect you against theft or damage to the contents of your home such as appliances, furniture, carpets, curtains, and light fittings in the event of:

  • Fire
  • Lightning strikes
  • Storm damage
  • Flooding
  • Tree falls
  • Earthquakes
  • Explosions
  • Vandalism
  • Impact damage (if a car crashes into the home or in the event of a break-in)
  • Water damage

It’s always beneficial to compare different insurance providers to find out what they cover and what you think you’ll need.

What does it not cover?

While landlord insurance covers most common risks, it unfortunately doesn’t cover everything under the sun. Here are some of the common exclusions:

  • General wear and tear
  • Build defects
  • If you damage the property yourself, or someone damages it under your instruction
  • If you breach the leasing agreement
  • Damage caused by rodents and insects
  • Damage caused by pets (some policies may cover this – check with your selected provider)
  • Parts of the property you don’t rent out
  • Tenant contents

John’s tenants left their dog Charlie alone for the weekend, only to find Charlie had done his business all over the carpet leaving stains everywhere.

While John had allowed the tenants to keep their pet, his insurance policy explicitly states it does not cover damage caused by pets. Therefore, his claim is rejected and he must pay for carpet cleaning out of his own pocket.

What is liability cover?

Public liability insurance can be defined as:

“Insurance covering a person or business for costs from legal action if they are found liable for death or injury, loss or damage of property resulting from their negligence.”

Liability insurance covers the landlord for any potential legal fees and compensation for damages in the case a tenant sustains an injury (or even death) at your rental property and you’re at fault. For instance, if a tenant sustains serious injuries as a result of a balcony collapsing, the liability insurance would help to cover the landlord for compensation to the third party.

Most landlord insurance policies include a version of public liability insurance in the terms and conditions. However, you should check this yourself just to be sure. Typically, public liability insurance covers up to $10 to $20 million for the landlord’s legal liability with most insurers.

How much does landlord insurance cost?

Unfortunately, there’s no one answer fits all when it comes to the cost of landlord insurance. The cost of a policy is determined by a number of factors including:

  • The value of the property and also the contents within: the more you insure, the higher the premium.
  • The type of property: if it’s an apartment, townhouse, or freestanding house.
  • The location of the property: locations in riskier areas (e.g. high crime, flooding, bushfires) may increase your premium. This also includes the state you live in – Northern Australia (NT and North Queensland) tend to pay more on average due to cyclones and flooding events.
  • The price you charge for rent: the more you charge, the higher your premium may be.
  • The security of the property: locks, alarms, and security cameras make theft less likely thus affecting your premium.
  • The cost of replacing your belongings
  • The structural integrity of the property: a building made of stronger materials tend to be cheaper to insure.
  • Any extra inclusions you wish to add to your coverage
  • The level of cover and excess you choose: the more extensive the cover, the higher your premium might be.

As a rough guide, an average policy costs anywhere between $1,000 to $2,000 in the different states. Meanwhile, Northern Queensland can see premiums go as high as $3,000 to $4,000 per year.

If you’re after an estimate of costs, most insurers can generate a rough quote for you online.

How to claim landlord insurance

To make a landlord insurance claim, contact your insurer as soon as possible online or over the phone. Make sure you have your insurance policy handy. The insurer will then ask a series of questions about the loss or damage. It can be beneficial to have plenty of notes and photos taken, as well as any receipts of purchased items – this can be helpful in lodging your claim. Some insurers have claim forms available to download from their website.

In the event of theft, contact the police or emergency services to report the incidence and provide the police report number when lodging the claim.

Depending on the damage/loss, the insurer may send out an assessor to inspect the property onsite.

You may also be required to provide the following documents when making a claim:

  • Copies of the lease agreement
  • Copies of communication with tenants, including notices
  • A breakdown of bond deductions
  • Quotes for repairs or maintenance
  • Inspection reports etc.

If your insurer won’t cover your claim, you can ask for their decision to be internally reviewed through the insurer’s dispute-resolution body. However, should things need to be taken further, you can contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678, within two years of an internal review decision.

How long does the claim process take?

The general wait time is typically anywhere from a few days to a couple of weeks to settle the claim. However, this all depends on the size of the claim, details, and your insurer.