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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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Home and contents insurance protects your home against damage or accidents. Landlord insurance covers you for the same things, but also covers you for loss of rent and malicious damage by your tentants. It's a no-brainer if you're a landlord.
What’s the difference between landlord insurance and home insurance?
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 |
|---|---|---|
| Fire | ||
| Storm | ||
| Flood | ||
| Water | ||
| Impact | ||
| Legal liability | ||
| Loss of rental income | ||
| Legal expenses to evict a tenant | ||
| Replacement locks after evicting a tenant | ||
| Malicious damage by tenant |
Renting out a property? Get covered with landlord insurance
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 14 June 2021, 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.
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Read more:
Picture: Unsplash
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Ask an Expert
Hi
We originally took out landlords insurance but now have family members living in the home and not paying rent. Are we still covered by our current Landlord Insurance?
Hi Mel,
If the members aren’t paying rent then you might not be covered for the landlord insurance part of your policy. If you decide that you no longer need the additional extras under landlord insurance like cover for loss of rent or damage made by the tenants, then you may be able to simply change over to a building insurance policy and list it under ‘Owner occupied’ as you have family members living there. This might be slightly cheaper than your current landlord insurance policy.
Hope this helps!
Best,
Alexandra
Can a building owner pass on a share of the building insurance cost to the tenant or lessee?
Hi Viv,
It’s generally the landlord’s responsibility to take out building insurance and if the tenant would like cover for their own things, they can take out a renters insurance policy that will cover their contents and personal possessions.
If you’re having difficulty with a dispute, I’d suggest getting in touch with the Australian Financial Complaints Authority (AFCA) that can help you reach a resolution with the other party.
Hope this helps!
Best,
Alexandra
Please advise which companies can offer house and contents insurance for airBnB properties. I keep getting directed to various insurers but but as I finish each quote submission I am advised that they do not cover for such. This is becoming very frustrating and time consuming.
Hi Gail,
Thank you for reaching out to Finder.
For Airbnb properties, you’ll need to look for a policy like a landlord insurance. They will cover you for things like tenants damaging your property, as well as your home itself.
You can try landlord insurance from BudgetDirect, Youi, and Virgin Money. You can request quotes from our holiday home insurance page. The page also discusses Airbnb Host Guarantee which you may need to check when comparing your options.
Hope this helps! 😊
Kind Regards,
Mai