Renting out a property? Compare landlord insurance policies to find the best protection for your investment.
Landlord insurance can protect you if your tenants go rogue, don't pay their rent, or if something happens to your property. It just makes sense. Compare landlord insurance policies below and learn what to look for in finding the best cover for you.
We analysed 8 insurers and found a difference of $1,660 a year between the least and most expensive landlord insurance policy for the exact same home. The moral of the story? Get a bunch of quotes before you sign on that dotted line.
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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.
Loss of rental income
Landlord insurance protects you against the loss of rental income due to the following events and circumstances:
- Absconding tenant. This refers to a tenant moving out without giving proper notice, or if they move out at the end of the lease and leave rent unpaid.
- Defaulting tenant. You’ll be covered if a tenant fails to pay their rent and is either issued with a termination notice, or has their lease terminated by court or tribunal order.
- Tenant failing to vacate. If you suffer loss of rent due to a tenant who refuses to pay rent and vacate your property following a court order, landlord insurance provides financial protection.
- Death of a tenant. Covers you for loss of rent if your tenant should pass away.
- Tenant hardship. If a court decides that, due to financial hardship, your tenant will be released from their lease obligations, your policy will cover you.
- Unlivable property. This benefit ensures that you are covered for loss of rent if your property isn’t fit to be leased due to malicious damage to the building by a tenant, or damage to your contents caused by an insured event.
- Unable to access property. Your policy can provide cover if a tenant is unable to access the property due to damage to other properties nearby.
Damage to building
If there is loss or damage to your building caused by tenants, their family members or guests they invite onto the property, landlord insurance will offset the cost of repair or replacement. Cover is included for the following:
- Insured events. Just like a regular home insurance policy, landlord insurance provides cover against events such as fire, flood, storm and water damage. It includes demolition, removal of debris and rebuilding costs.
- Accidental loss or damage. Your building is covered against sudden and unexpected loss or damage.
- Intentional damage. If the building is wilfully damaged without your consent, your policy offers financial protection.
- Malicious damage. This covers damage to the property that is motivated by malice.
- Theft. You’re covered for loss suffered due to theft, as well as any damage to your building that occurs as a result of theft.
- Pet damage. Many landlord insurance policies cover damage to the property caused by a domestic pet owned by the tenant and listed on the lease.
- Scorching. If cigarettes, irons or pots and pans spoil the carpet or bench tops in your property, you will be covered for the damage.
What's classified as a building?
A building is defined as a property that you own at the insured address, which is used primarily for residential purposes. The definition of a building includes:
- Fixtures and fittings, including built-in air conditioning units, plumbed-in dishwashers, cooktops, doors, walls and windows
- Structural improvements, including paths, driveways, fencing, retaining walls and in-ground swimming pools
- Awnings, pergolas, TV antennas, solar panels and letterboxes
- Fixed floor coverings such as linoleum and tiles, but not carpets
- Fixed light fittings
- Underground services located on your property, including sewerage, plumbing and electrical services
Landlord insurance also provides protection for the contents you own, or for which you are legally responsible, in your investment property, including the following:
- Accidental loss or damage. You’re covered for sudden or unexpected loss or damage to contents.
- Intentional and malicious damage. Protection for damage caused by a tenant or by any other unknown person.
- Insured events. Incidents such as flood, storm and rainwater, fire, explosion, impact, escape of liquid, earthquake, lightning and glass breakage are all covered by this policy.
- Theft. This benefit insures against theft or attempted theft by a tenant, members of the tenant’s family, the tenant’s invited guests or an unknown person.
What contents are covered?
The contents covered under a landlord insurance policy are those items owned by you at the property, or for which you are legally responsible. This includes:
- Electrical appliances
- Portable household items
- Curtains and blinds
- Manchester and linen
- Carpets and rugs
- Above-ground pools
- If you own a property in a strata titled building, contents can also refer to temporary wall, floor and ceiling covers
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.
How much does landlord insurance cost?
There is no blanket answer to the question of how much you can expect to pay for cover. But we did get quotes for 8 Australian landlord insurance brands and found that the cost of landlord insurance can differ by hundreds a year for the exact same property.
The cost of landlord insurance is influenced by a number of factors, including the following:
- The type of property you own. A five-bedroom house will typically cost more to insure than a two-bedroom apartment, for instance.
- Where the property is located. This can affect the likelihood of you needing to make a claim. For example, your home may be found in an area prone to severe storm and cyclone damage, or you may live in a high-crime area where there is an increased risk of theft or burglary.
- The site itself. Other unique factors about your property will also be taken into account. For example, if it’s located in a flood-prone area or surrounded by tall trees, your premiums could be higher.
- The value of your building and contents. How much would it cost to rebuild your property and to replace all the contents that are the landlord’s responsibility? The higher this figure is, the higher your landlord insurance premiums will be.
- How secure your property is. Does the property have any security features to deter thieves and burglars, such as a state-of-the-art alarm system? If so, this could lower your premiums.
- The age and construction of your property. The insurer will consider how old your property is and the materials used in its construction when determining how likely it is to withstand damage.
- 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.
For an accurate guide to the cost of cover, compare landlord insurance quotes from multiple insurers.
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:
- The building and any of its structural improvements
- Fixtures which form part of the building
- Common areas
- Fences and gates
- Fixed swimming pools
- Playing surfaces, such as tennis courts
- Above-ground and underground services
- Lawns, trees, plants and gardens
It also covers contents located in a common area, such as:
- Furniture and furnishings
- Blinds and curtains
- Light fittings
- Portable appliances
- Temporary wall, floor and ceiling coverings
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:
- Any intentional act committed by you, your family or anyone acting with your consent
- Water entering the building through an opening made to renovate or extend the property
- Poor housekeeping by your tenants, such as unhygienic or untidy living habits
- Rust, wear and tear, mould or mildew
- The lawful seizure of your property
- Loss or damage caused by insects or vermin
- Repairs carried out by the tenant with your consent
- If you breach the lease agreement
- Loss or damage that arises due to keys being provided for property inspections
- The tenant using the property for trade, manufacturing or childcare with your knowledge or consent
- The lawful seizure of the property
- If the property is vacant, is not advertised for sale and no effort is being made to either prepare the property for a new tenant or find a new tenant
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.
Top landlord insurance tips
Remember these simple rules to ensure that you get the most from your landlord insurance policy:
- Get a signed agreement. Many insurers will not provide cover if you do not have an official tenancy agreement in place that you and the tenant have both signed. Make sure you have a written agreement before a tenant moves in.
- Buy cover before your tenant moves in. Make sure you purchase cover before your tenant actually moves into your property. If they have already moved in and fall behind on rental payments before you buy a policy, your insurer probably won’t provide any cover.
- Conduct regular inspections. Regular property inspections are essential not only to minimise the risk of tenants damaging your property, but to also back up any claim you make on your policy.
- Keep detailed reports. Completed entry and exit reports with supporting photographs will protect you if any damage arises.
- Check exactly what's covered. If you choose a landlord policy that also covers some of the contents of the property, look closely at the fine print to see exactly what is included. For example, check what fixtures and fittings are listed. Most policies offer protection for damage to items such as pipes and cables, fixed appliances, sheds, exterior blinds and awnings, and in-ground swimming pools.
How is landlord insurance treated in each state?
Landlord insurance works the same no matter what state you are in. However, there are some differences between states around the rights and responsibilities of landlords and tenants and these could have an effect on insurance claims down the road. For example, some states give tenants more rights in regard to pets, which have the potential to create damage that you may need to claim for.
Here's what you need to know as a landlord in these states:
- Bond and advance rent. As a landlord in NSW, you are allowed to collect four weeks bond and two weeks advance rent.
- Rent increases. If the lease is a fixed-term agreement of less than two years, you cannot increase the rent unless you’ve added a special term to the contract explaining exactly why the rent will increase and how the increase will be calculated. If it is a fixed-term agreement of more than two years, you can increase the rent at any time but only once every 12 months. In all cases, including periodic leases, you must give 60 days notice.
- Ending a tenancy. If you want to end a fixed-term lease, you have to wait until the lease is up and tell the tenant at least 14 days before that date. On a periodic lease (ie, month-to-month), you have to give your tenant a 90-day notice if you want them out. It's different if they breach the contract, in which case you only need to give them a 14-day advance warning regardless of what type of lease they are on.
- Pets. There are no laws saying tenants can't have pets, but as a landlord, you do have the right to ban pets as long as it's written into your rental agreement.
- Access for inspections. You're allowed to conduct four routine inspections every 12 months, but you'll need to give your tenant a written notice at least seven days in advance of the inspection.
- Bond and advance rent. You can request a bond equal to one month's rent if you rent the place for less than $350 per week. You can also ask for a 14-day advance rent payment if rent is paid weekly, or a one-month advance rent payment if the rent is paid monthly. If the rent is higher than $350, you can ask for whatever bond you want and ask for advance payment of up to five years.
- Rent increases. You cannot increase the rent in the middle of a fixed-term lease unless the contract states that you can. Otherwise, you can increase rent once every six months with a 60-day notice.
- Ending a tenancy. You can't end a fixed-term lease until the lease is up and you have to give your tenants a notice prior to that if you want them out (60 days for a lease of six months or less, 90 days for a longer one). If the tenant is on a periodic lease, you have to give them a 120-day notice. These can be shortened if you have a good reason (like selling the property) and any fixed-term lease has ended or is about to end.
- Pets. Tenants have the upper hand in Victoria. Although they need your written permission to keep a pet in your property, you can't refuse it without approval from the Victorian Civil and Administrative Tribunal.
- Access for inspections. In Victoria, you're only allowed one inspection every six months, but a 24-hour written notice is all you'll need to give the tenant prior to inspection. You can't do an inspection within the first three months of tenancy.
- Bond and advance rent. You can legally collect four week’s bond on places that rent for $700 per week or less. There are no bond limits for places you rent for more than that. The maximum advance rent you can charge for any rental is one month for fixed-term agreements and two weeks for periodic agreements.
- Rent increases. You can increase rent once every six months with a two-month notice. However, you can’t increase the rent on a fixed-term agreement unless the contract states that it will be increased.
- Ending a tenancy. To end a fixed-term lease, you have to wait until the lease is up and give two month’s notice. It’s also a two-month notice to end a periodic lease. If the tenant breaches the contract, this notice period can be shorter depending on the severity of the breach.
- Pets. Landlords have the upper hand here, as tenants are required to get written approval in order to keep a pet in a rental property.
- Access for inspections. As a landlord, you're allowed one inspection every three months and you must give your tenant a notice period of at least seven days before each one.
- Bond and advance rent. If rent is $250 or less per week, you are allowed to request a bond equal to four week's rent. If rent is more than that, you can request a bond equal to six week’s rent. You can also ask for two weeks advance rent in each case.
- Rent increases. You cannot increase the rent during the first 12 months of a tenancy. After that, you can increase rent once every 12 months as long as you’ve given a 60-day notice. You cannot raise the rent in the middle of a fixed-term lease unless it is written into the agreement about the possibility of an increase and the circumstances in which it would happen.
- Ending a tenancy. To end a fixed-term lease, you have to let the tenant know 28 days in advance of the lease ending. If it's a periodic lease, you have to give them a 90-day notice unless you have a good reason (such as selling the house), in which case you can shorten the notice to 60 days.
- Pets. Tenants will need your written permission if they want to keep a pet in your rental property.
- Access for inspections. You're allowed to inspect once every four weeks, but you need to provide a written notice of between 7-14 days prior to each visit.
- Bond and advance rent. You can ask for a bond of up to four week’s rent unless you rent the place for more than $1,200. If that’s the case, there is no upper limit. You can also ask for two weeks advance rent.
- Rent increases. You can increase the rent once every six months with a 60-day notice. In a fixed-term arrangement, this also needs to be stated in the agreement or else you’ll need to wait until the agreement ends. Your first increase can’t occur until at least six months after the tenancy starts.
- Ending a tenancy. You must let your tenant know 30 days before a fixed lease ends. If it is a periodic lease, you need to give them a 60-day warning unless you have a valid reason (such as selling the house or tenant not paying rent), in which case you can shorten the notice.
- Pets. As a landlord, you're in control, as tenants need your written permission if they want to keep a pet in your rental property. You're also allowed to charge a "pet bond” of up to $260.
- Access for inspections. You're only allowed four inspections per year and you'll need to give a notice period of between 7 and 14 days before each one.
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