Landlord insurance vs home insurance
Normal home insurance can’t protect you from a problem tenant or loss of rent. Landlord insurance can.
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Landlord insurance is simply a form of home insurance that covers everything normal home insurance does plus a range of extra protection for problems unique to landlords. With normal home insurance, you can typically choose two forms of protection: protection for your home (building insurance) and protection for your belongings (contents insurance).
Landlord insurance refers to a group of insurance products that covers three areas: the building, the contents, and the “business” (tenants insurance). Your business in this case involves your tenants, so tenants insurance (or tenants protection) is one of three subsets of landlord insurance that protects you against any issues your tenants may cause.
It is tenants protection that sets landlord insurance apart from residential home insurance, so it’s tempting to refer to this subset alone as “landlord insurance”. However, you must remember that insuring the building and the contents is just as important.
What will landlord insurance protect you for that home insurance won’t?
The tenant protection part of landlord insurance gives you additional protection against the following:
- Theft and intentional damage by the tenant
- Loss of rent when your place is damaged
- Loss of rent if the tenant can’t pay
- Your legal expenses if you have to evict a tenant
- Replacement locks if you have to evict a tenant
Features included in landlord insurance vs home insurance
Here’s a more detailed breakdown of the similarities and differences between landlord insurance and home insurance.
|Type of damage or loss||Landlord insurance||Home insurance|
|Loss of rental income|
|Legal expenses to evict a tenant|
|Replacement locks after evicting a tenant|
|Malicious damage by tenant|
How to choose the right landlord insurance
As a landlord, there are three areas you need to protect: your building, the belongings that you keep in the building and your rental income from that investment. Here’s how to make sure you have the right amount of cover:
- Decide what needs to be protected. If you don’t keep much inside the property or if losing the contents won’t break the bank, you may be able to get away without contents insurance. If you are renting to a family member and trust them not to burn the place down, you may also be able to do without landlord insurance. Similarly, if you’re living in an apartment, you might not need building insurance as strata has your back. But for the most part, it would be shortsighted to go without either building insurance or landlord protection because these can literally save your entire investment.
- Decide how much to insure the building for. When you’re insuring the building, it makes sense to insure it for it’s entire value, otherwise you would only get a partial payout if it is destroyed. This could end up costing you hundreds of thousands of dollars. You can also add additional cover that would enable you to rebuild your property to the same specs as the old one, even if the cost of building materials has risen causing the costs to blow out.
- Read and re-read the exclusions in your policy documents. These are the situations where you won’t be covered. For example, you won’t be covered for floods unless you buy additional flood protection. If you’re not familiar with your policy’s exclusions, it can be easy to overlook a key piece of information such as this.
Do you need home insurance if you already have landlord insurance?
You will not need an additional home insurance policy if you’ve already taken out building and contents insurance as part of your landlord insurance. However, if you’ve only taken out tenant protection, that won’t cover you if the building is damaged, or if the items inside are damaged or stolen. In that case, you would need to add either building insurance or contents insurance depending on your needs.
Do you need landlord and home insurance if you live in the same building?
If you live in the same building where your rental properties are located, you’ll need to make sure your personal home is insured in addition to your rental properties. A situation such as this is a little more complex, but If you ring the insurer you are considering, they can usually set you up with a custom policy to suit a variety of living situations
What is the difference between landlord insurance and tenants insurance?
Landlord insurance refers to a group of products that covers three areas: the building, the contents, and any issues caused by the tenants. The insurance for the latter is known as tenants insurance or tenants protection, and is simply one of these three subsets.
Brands still offering landlord insurance
As of 23 October 2020, the following brands are still offering new landlord insurance policies. All existing policies should be respected, but it's best to check directly with your insurer.
|Provider||Are they still offering landlord insurance?||Are they offering tenant default options?||Apply|
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