Do I need landlord insurance?

Do I need landlord insurance?

May 11, 2018 | by DiJones

Landlord Insurance is a type of insurance policy designed specifically to help financially protect landlords for some of the common risks associated with renting their investment property.

How is landlord insurance different to building insurance?

A common question asked is “What’s the difference between landlord insurance and building insurance?” as some landlords may already have some type of Building Insurance.

The short answer is that many standard building insurance policies usually provide cover for loss or damage to your building as a result of unexpected events such as fire, storm and flood. However, when you are renting a property to tenants, you should also consider the risk that your tenant may cause accidental or malicious damage to your property and consider whether your Building Insurance will cover you for these risks. A Building Insurance policy designed specifically for landlords may also include provision for loss of rent should your property become untenantable due to damage caused by an insured event.

Landlord Insurance is different as it provides protection for some of the tenant related risks that may not be covered by standard Building Insurance, including damage caused by your tenant’s visitors and friends. Usually, the main difference with Landlord Insurance is the breadth of rental income protection and whether loss of rent is included as standard or is an optional extra. For example, Landlord Insurance can cover for:

  •  Loss of rental income should your tenant abscond, default on the rent in some circumstances, experience hardship and are released per court order, or you’re prevented from accessing the property due to damage caused by an insured event; or
  •  If your property is untenantable for a minimum of 7 days whilst tenant related damage to contents by an insured event is being repaired.

Landlord Insurance provides cover for your property against loss or damage caused by tenants, whether malicious, accidental or deliberate. This includes:

  • Building Cover: Fixtures and fittings, such as hot water systems, built-in air-conditioners and heaters, built-in cabinetry, doors, walls and windows, fencing, paths, driveways and in-ground swimming pools, rainwater tanks and solar panels, floor tiles.

  • Landlord contents cover: This could be big-ticket contents items like light fittings, blinds and curtains, carpets, and electrical appliances.

Whether or not you own a property in a Body Corporate (also referred to in some states as Strata plan), another benefit of Landlord Insurance which may be of particular interest in this situation is the public liability cover. What many landlords in a Body Corporate might not know is that Body Corporate public liability insurance may only cover common areas, anddoesn’t include public liability cover for the landlord inside the individual property itself. This means you could be left out of pocket should your tenant or their visitors incur medical expenses or loss of income as a result of a public liability event within your property.


Do I really need landlord insurance?

Many landlords assume nothing untoward will ever happen to their rental property. Unfortunately, this is not always the case.

Unexpected events do occur, with even the most well-meaning tenants defaulting on their rent or accidentally damaging your property. Whilst you can check your tenant’s rental history, you cannot predict the future which may include your tenant losing their job, suffering a long-term illness or being unable to earn an income or suffering a relationship breakdown; all common occurrences which can affect the tenant’s ability to pay rent. According to major landlord insurance specialist, around 30% of Landlord Insurance claims are rent-loss related. Landlord Insurance could save you significant losses in the long run.

Is Landlord Insurance expensive?

Levels and features of Landlord Insurance cover may vary by insurer, so the cost of Landlord Insurance will vary depending on the insurer, the policy type, and the cover options you choose. It’s important to compare Landlord Insurance policies as some policies, for example, some insurance includes rent protection as a standard benefit, as well as some extras like damage caused by pets, replacement of locks, reletting costs, as well as removal and storage of discarded tenant possessions should the bond fall short.