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What you need to know
Landlord insurance covers the most common risks you face as a property investor.
It can cover costs related to natural disasters or a tenant who does not pay their rent – but it cannot cover everything.
Building cover protects the physical structure of your property – as opposed to the contents inside it – if it's damaged or destroyed by an insured event such as a natural disaster or fire. Building cover generally includes the following:
The building itself
Pipes, cables and plumbing system
Some external structures such as built-in swimming pool
If your property is unliveable, building insurance can also cover you or for the loss of rent. However, it generally doesn't cover strata title buildings. If your rental property is part of a shared block, you'll likely need strata insurance.
What is contents cover?
Contents cover encompasses all the items you keep at your rental property. For example:
Furniture
Appliances such as white goods
Blinds, curtains and carpets
If an insured event occurs, landlord contents insurance can pay to repair or replace any damaged or destroyed items. In most cases, it's only worth getting contents cover if your property is furnished.
Combined cover
If you own a furnished property, most insurers allow you to combine building and contents cover.
4 main benefits of landlord insurance cover
Tenant default
Tenant or rent default is when the tenant stops paying rent. In most cases, this happens when the tenant's income is stopped or reduced because they unexpectedly lose their job or become ill. If this happens, landlord insurance can cover you.
Loss of rent
This covers you for loss of rental income if your property is damaged and becomes uninhabitable. For example, if the tenant can no longer stay due to a fire, flood, serious building damage or other insured events.
Damage by tenant
This covers costs related to damage that your tenant, their guests or pets cause. It can pay out for accidental and malicious damage.
Legal liability
This refers to legal costs if someone, generally the tenant, accuses you of negligence. For example, if you fail to meet safety requirements or building standards or you fail in your duty of care and a tenant or visitor is injured or their property is damaged.
Other common benefits with landlord insurance cover
In some cases, you get these benefits automatically included with your landlord insurance policy; others offer them as add-ons. This means you need to pay a little extra to get covered.
Motor burnout
New for old replacement
Accidental damage
Flood damage
Sum insured safeguard
Storage of undamaged contents
Temporary accommodation
Mortgage discharge costs
You might hear the term "insured event" a lot when looking at what landlord insurance covers. It may sound a little vague but that's mainly because an insured event encompasses a lot of things. Here's a long list of what these are:
Flood
Storm
Storm surge (in some cases)
Earthquakes
Tsunamis
Fires (including bushfires)
Lightning
Impact
Explosion
Theft or burglary
Malicious acts and vandalism
Escape of liquid
Animal damage
Civil unrest and rioting
Ready to get landlord insurance?
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Frequently asked questions
Landlord insurance generally doesn't cover the following:
Regular maintenance
Tenant repairs
Tenant's items
Wear and tear
Mould (unless the mould was covered by an insured event)
Building defects
Damage caused by vermin, insects or rodents
Damage caused by movement of the sea
Damage related to war
Landlord insurance also doesn't generally cover you if you take out a policy after a weather event such as a flood, storm or bushfire has become a known event. For example, you see it on the news or read about it and you try to make a claim.
Landlord insurance is worth getting if you want financial security. If something happens, such as a fire or storm, and your property is damaged or destroyed, you could be looking at thousands or even millions of dollars in expenses, unless you get landlord insurance. It's also helpful if you get a policy that covers loss of rent and tenant default. Both ensure that you can continue to receive an income from your property.
Landlord insurance can cover loss of income in a couple of ways: if your tenant can't pay their rent (tenant default) or your property gets damaged or destroyed and becomes uninhabitable (loss of rent).
Gary Hunter is a writer at Finder, specialising in insurance. He’s been writing about life, health, travel, home and pet insurance for over three years, has pored over hundreds of product disclosure statements and written more than 500 insurance articles. Gary holds a Tier 1 General Insurance (General Advice) certification and is passionate about helping Aussies understand their policies so that they can get better value for their money.
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