Granny flat insurance 

I live in a granny flat which someone else owns

If you live in someone else's granny flat, you don't need building insurance. The owners will be responsible for any damages to the building, including the roof and walls.

However, you may benefit from contents insurance. This protects all your belongings inside the granny flat, such as furniture, electronics and even clothing. Some policies will even cover items outside your home, such as garden furniture.

Things that contents insurance will cover

Contents insurance will kick in following a whole range of different events, including:

Things that contents insurance won't cover

Contents insurance provides support in lots of different situations. But it won't cover everything. Typical exclusions are:

This list isn't exhaustive, so it's important to read your insurance documents carefully.

Granny flat insurance for owners renting their property out

Do you have a granny flat that you're renting out to someone else? That extra income can go a long way, but renting out your property does have its risks.

While home insurance will cover your permanent residence, it probably won't cover your granny flat if you're making an income from it. Instead, you'll need landlord insurance.

Things that landlord insurance will cover

Landlord insurance offers wide protection to people renting out their granny flat, for events including:

Things that landlord insurance won't cover

While landlord insurance can end up being a huge money-saver, it won't cover everything. Some common exclusions are:

Frequently asked questions

• What insurance do I need if a family member lives in my granny flat for free?

  This situation is typically considered part of your main home for insurance purposes. Your standard home insurance policy should cover the granny flat building itself. The family member living there may wish to purchase their own contents insurance to protect their personal belongings such as furniture, electronics and clothing. This ensures their possessions are covered against events like theft or fire.

• Does standard landlord insurance cover short term rentals like Airbnb or Stayz?

  Generally no. Most standard landlord insurance policies are designed for long term residential tenancies and may exclude or limit coverage for short term holiday rentals. If you are renting your granny flat out through platforms like Airbnb or Stayz you will need to look for a specialised landlord insurance policy that explicitly covers short term rental arrangements. Always check the Product Disclosure Statement (PDS) carefully and disclose your rental intentions to your insurer.

• Can I get insurance for a granny flat that is still under construction?

  No, your standard home insurance or future landlord insurance will not cover a granny flat during its construction phase. You typically need a specific type of policy such as builder's risk insurance or construction insurance. This covers risks associated with the building process including damage to materials, accidental injury on site and theft of equipment. Once construction is complete you can then transition to a standard home or landlord insurance policy.

• What if my granny flat is attached to the main house?

  If your granny flat is physically attached to your main dwelling it will usually be covered under your primary home insurance policy for the building structure. However if you are renting out the attached granny flat you must inform your insurer. Depending on your insurer's policy you might need to extend your home insurance with specific landlord coverage for the rented section, or take out a separate landlord policy. Always confirm your specific circumstances with your insurer to ensure adequate cover.

• Will adding a granny flat increase my home insurance premiums?

  Yes, adding a granny flat will almost certainly increase your home insurance premiums. A granny flat represents an additional structure on your property which increases the overall rebuild cost and potential liability. Insurers will factor in the new building's value, size, construction materials and its intended use when calculating your premium. If you are renting it out, your premiums will be higher due to the increased risks associated with tenants.

• Is my granny flat still insured if it is vacant for an extended period?

  Insurance policies usually have clauses regarding unoccupied properties. If your granny flat is vacant for an extended period, typically 60 or 90 consecutive days, your coverage may be reduced or even void. It is crucial to inform your insurer if your granny flat will be unoccupied for longer than the specified period in your policy. They may offer specific unoccupied property cover or advise on requirements to maintain coverage.

Written by

Nicola Middlemiss

Journalist

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Nicola Middlemiss is a journalist with nearly a decade of experience in personal finance and insurance. She has contributed to Domain, Yahoo Finance, Money Magazine and Insurance Business Australia, offering in-depth insights into commercial insurance in the Australian market. Nicola holds a Bachelor’s degree in English from the University of Leeds and a Tier 1 General Insurance (General Advice) certification, which complies with ASIC standards. See full bio

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Nicola has written 170 Finder guides across topics including:

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