Renting out a property? Protect your investment and compare landlord insurance policies today.
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.
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Why do I even need landlord insurance?
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. There are 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. Landlords also need to contend with the financial risks posed by tenants. Tenants or their guests could cause malicious damage to the property, steal from you, default on their rent, or lodge a claim for legal liability against you.
All of these risks can end up being incredibly costly if you don’t have the best landlord insurance policy for you in place.
What does landlord insurance actually cover?
- accidental glass breakage
- loss or damage caused by earthquakes
- loss or damage caused by fire
- loss or damage caused by lightning
- loss and damage caused by storms, rainwater and run-off
- loss or damage caused by the impact of road vehicles, rail vehicles, watercraft, external aerials, animals, falling trees and aircraft
- liability, including for a claim against you by the tenant, and for property damage and injury claims lodged by a third party
- malicious acts, vandalism and intentional damage to the property
- riot or civil commotion
- theft and burglary
- water and other liquid damage
- loss of rent if the tenant defaults on their payments
- tenant neglect, poor housekeeping or unhygienic living habits
- wear and tear, rust and corrosion
- 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
What should I be looking for in a policy?
No two insurance policies are the same. Some landlord insurance cover is designed to be taken out in unison with your home and contents insurance. Other policies are more comprehensive and do not require this.
There are some general ground rules to look out for. The best landlord insurance policy should offer adequate coverage for each type of situation. Ensure you have 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.
- Fixtures and fittings. 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.
- Possessions. If you choose a landlord policy that also covers some of the contents of the property, look closely at the fine print to see what is included in your policy. Note the coverage of carpets, blinds, furnishings, and light fittings.
- Tenant default. 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 if a tenant dies unexpectedly.
Are there any additional options to consider?
Many landlord insurance policies will offer the following options for an additional cost:
- Rent default. This provides cover for when tenants experience financial hardship or die unexpectedly.
- Theft by tenant. This is not always covered so be sure to read individual policies.
- Legal expenses. If you lodge a claim for rent default or tenant theft you are able to cover the cost of legal expenses for recovering rental income owed to you.
- Strata title mortgage protection. This is useful for properties that are units. 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 covers your liability if you employ a person to do work on your rental property and they are injured whilst working for you.
* 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.