Compare Rental Insurance from Australian Brands and Protect Your Investment
When you’ve worked long and hard to purchase an investment property and have sunk a sizeable proportion of your hard-earned cash into it, the last thing you’d want is for your money to be wasted. However, damage caused by fire, theft, storms and even bad tenants can lead to costly repair and leave you significantly out of pocket.
With this in mind, it’s important to take out financial protection for your investment property in the form of landlord insurance. As the name suggests, this type of cover is suitable for people who are renting out a house, unit or flat they own. Every landlord would be well aware that renting property out to tenants is not without its risks, so it’s important that you take out appropriate protection to guarantee your own peace of mind.
Why do I even need it?
Ask any landlord what it’s like to rent out an investment property and you can be sure they’ll be quick to warn you of the risks involved. A rental property is an important investment, so you need to protect yourself from any financial losses that may arise from your investment.
Common risks to properties
First, there’s all the normal risks that affect any residential property, including fire, flood, storm damage, lightning, explosion, escape of water or oil, theft and malicious damage. All of these perils can cause significant damage to your rental property and end up being quite expensive to repair.
Risks from tenants
Second, landlords also need to contend with the financial risks posed by tenants. Tenants or their guests could cause malicious damage to the property, they could steal from you, they could default on their rent and they could even lodge a claim for legal liability against you.
All of these risks can end up being incredibly costly if you don’t have an adequate landlord insurance policy in place.Back to top
What should I be looking for in a policy?
When you’re shopping around for the best* landlord insurance policy on the market, there are a number of features you should look for in a policy. Generally speaking, most policies will cover loss and damage caused by:
- Lightning strikes
- Flood. Read the fine print associated with your policy’s flood cover, as some policies will feature exclusions such as no cover for flooding caused by rivers bursting their banks.
- Riots, civil commotion and unrest
Take the time to make sure your policy offers adequate coverage for each type of situation. For example, if your property is located in an area prone to severe storms, look closely at the level of storm cover provided.
- Cover for malicious damage: Most policies will cover you for malicious damage caused to the property by your tenants and their guests, but you may have to pay an extra premium for this feature. It’s also a good idea to check that your insurer covers you for any loss of rent while the property is uninhabitable.
- Cover for fixtures and fittings: The next step is to check exactly what fixtures and fittings are included in your property cover. Most policies will generally offer protection for damage to things like pipes and cables, fixed appliances, sheds, exterior blinds and awnings and in-ground swimming pools.
- Cover for possessions: If you choose a landlord policy that also covers some of the contents of the property, again, look closely at the fine print to see what is included in your policy. Check to find out to what level carpets, blinds, furnishings, light fittings and the like are protected.
- Cover for tenant default: Finally, the best* landlord insurance policies will cover you when tenants default on their rent. This may happen because of a tenant’s financial difficulties, if a tenant is evicted due to a court order or even if a tenant dies unexpectedly.
As with any other type of policy, remember to check whether any claim limits apply and investigate the insurer’s claims handling process before you choose a policy.Back to top
What does landlord insurance generally cover?
- Accidental glass breakage. This feature covers the accidental breakage of fixed glass, ceramic cooking surfaces, ceramic wash basins, baths and more.
- Earthquake. Loss or damage caused by an earthquake is covered by landlord insurance policies.
- Fire. Loss or damage caused by fire and smoke are covered.
- Impact. Damage or loss caused by the impact of road vehicles, rail vehicles, watercraft, external aerials, animals, falling trees and aircraft.
- Lightning. Loss or damage caused by lightning.
- Malicious acts and vandalism.
- Malicious acts, vandalism and intentional damage to the property by the tenant or their guests.
- Riot or civil commotion that results in loss or damage.
- Storm. Loss and damage caused by storms, rainwater and run-off are included in cover.
- Theft and burglary.
- Theft by the tenant or their guests is also covered.
- Tsunami. An extra excess may apply when you make a claim for tsunami loss or damage.
- Water and other liquid damage. This includes damage caused by the bursting, leaking or overflowing of items like fixed pipes, fixed tanks, dishwashers and washing machines.
- Loss of rent if the tenant defaults on their payments. Legal expenses incurred in taking action against a tenant to recover the rent owed to you are also covered.
- Liability, including for a claim against you by the tenant, and for property damage and injury claims lodged by a third party.
Additional options you might like to consider
Many landlord insurance policies will offer the following options for an additional cost:
- Rent default. While this is offered as part of the standard cover on some policies, it’s only available as an option on others. It provides cover when tenants die without notice, experience financial hardship or die unexpectedly.
- Theft by tenant. Once again, some policies will only include this benefit as an option.
- Legal expenses. If you lodge a claim for rent default or tenant theft, you can also take out protection to cover the cost of legal expenses for recovering rental income owed to you.
- Strata title mortgage protection. If your insured building is part of a strata title development, has not been adequately insured by the strata and is totally destroyed by an insured event, your policy will cover your remaining mortgage.
- Landlord workers’ compensation. This cover kicks in and covers your liability if you employ a person to do work around your rental property and they are injured while working for you.
What am I not covered for?
Regardless of whether you purchase cheap landlord insurance or an expensive policy, there are certain situations and events which your policy will typically not cover. These include loss, damage or injury arising from:
- Tenant neglect, poor housekeeping or unhygienic living habits
- Wear and tear, rust and corrosion
- The sea
- Subsidence or landslide
- Extreme temperatures
- Vermin or insects
- Tree lopping
- Tree roots
- The lawful seizure of your rental property
- Any act of terrorism
- Any act or intentional omission by you, or by someone who acts with your consent
- Mechanical, structural or electrical failure of an item
- Business interruption costs
- Settling, shrinkage or expansion of buildings
- You breaching the rental agreement
- Your failure to maintain your rental property in good condition
- Faulty design or workmanship that you knew about
- Repairs carried out by the tenant or anyone else acting on their behalf
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.