If you rent out a residential property, your home insurance usually won’t protect you as a landlord. Landlord insurance is designed for the risks that come with having tenants, such as damage to the items you supply, lost rent and claims made against you as the property owner. This guide explains the main parts of a landlord policy in plain English, so you know what to look for.
Building cover and landlord contents cover
Landlord insurance generally comes in two parts. (New to the terms? Our guide to building vs contents insurance explains the difference.)
- Building cover protects the structure of the property, such as the walls, roof and permanent fixtures.
- Landlord contents cover protects the items you own and leave in the property for tenants to use, such as carpets, curtains and blinds, light fittings and whitegoods.
If you own a unit or apartment in a strata scheme, the building is normally insured by the owners corporation (body corporate). In that case you may only need landlord contents and liability cover. Our Landlord Essentials policy is built for this situation: to be eligible, the building must be insured separately.
Events a landlord policy may cover
Policies list the events they cover, and these differ between insurers. Common examples include:
- Fire, explosion and lightning
- Storm and rainwater runoff
- Flood, where the policy includes it and the property is eligible
- Theft and burglary
- Malicious damage by tenants or their invited guests
Each event has its own conditions, limits and exclusions, so always check the Product Disclosure Statement (PDS) before you buy.
Tenant damage: malicious, accidental and wear and tear
This is the area landlords most often misunderstand. Insurers usually treat these as three different things:
- Malicious damage is damage done on purpose.
- Accidental damage is sudden and unintended, such as a dropped item cracking a benchtop.
- Wear and tear is gradual deterioration from normal use, which insurance policies generally don’t cover.
Check which of these a policy covers, and what evidence you may need to make a claim.
Loss of rent and tenant default
Some landlord policies can help if you lose rental income, for example if a tenant stops paying rent or leaves without notice. In Landlord Essentials, Loss of Rent & Tenant Default is optional cover. The PDS sets out when it applies and how much it pays.
Legal liability
As a property owner you could be held legally responsible if someone is injured at your rental property, or if their property is damaged, and you are found to be at fault. Liability cover can help with the cost of these claims, up to the limit shown in the PDS.
Questions to ask before you buy
- Is the building already insured, for example under a strata policy?
- Does the policy cover the type of tenancy you have, whether long-term or short-term?
- What is the sum insured for your contents, and does it reflect the cost of replacing them?
- Which excess applies, and how does a higher excess change your premium?
- Is flood included, optional or excluded for your property?
Next steps
See what NeedCover Landlords Insurance includes, check the eligibility criteria, get a quote online or apply online. If you’d rather talk it through, call 1300 368 112 or contact us.
This article is general information only and doesn’t take into account your objectives, financial situation or needs. Read the PDS and Target Market Determination (TMD) before you decide whether a product is right for you.