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What is landlord insurance and what does it cover?

Erin Delahunty

Erin Delahunty

6 Jul 2020

While most kinds of insurance – car, health or even pet – are pretty self-explanatory, landlord insurance isn’t as straightforward.

Landlord insurance is a type of insurance designed specifically for people renting out a property to tenants.

It bundles up the regular cover offered by a home insurance policy, with the additional cover that relates to investment property owners. It can cover contents belonging to the landlord in a property, depending on the policy.

What is covered under landlord insurance?

Canstar’s finance expert, Steve Mickenbecker, said landlord insurance can provide cover for a range of different events, from the usual home insurance inclusions for fire and natural disasters to incidents related to a tenants’ lease, including theft, malicious damage and vandalism, loss of rent due to tenant default and legal expenses required to evict a tenant.

living room rental

Landlord insurance is designed to assist with protecting the house as an investment asset. Picture: realestate.com.au/rent

It’s possible to get building-only or a policy that also covers contents belonging to the landlord, like carpets, blinds, dishwashers and removable air conditioning units.

Mr Mickenbecker used the example of a tree falling on a property during a storm, leaving it uninhabitable for nine weeks.

A home and contents-style policy would cover repairs to the structural damage, replacement of landlord-owned furnishings and fittings and cover any lost rent. A building-only policy would only fix the bricks and mortar.

“This means landlords, in choosing a policy, need to consider all of the usual aspects of cover that any other home owner considers, plus the specific additions that apply to rental property,” he said.

Why you should get landlord insurance

Taking out landlord insurance should be a no-brainer for landlords across Australia for a number of reasons.

1. For peace of mind

“An investment property is a big responsibility and taking out landlord insurance is one way to have some peace of mind that you’re covered should things go south with your tenants or there is damage to the building,” Mr Mickenbecker said.

rental kitchen bench

An investment property can be one of the most important assets someone can own. Picture: realestate.com.au/rent

2. To protect against tenant issues

Landlord insurance incorporates the protections that exist for a homeowner, plus the extra risks incurred by a landlord that would not otherwise be covered, such as protection for:

  • Theft or burglary by tenants or their guests;
  • Malicious damage or vandalism by tenants or their guests;
  • Loss of rent due to tenant default and;
  • Legal expenses required to evict a tenant

3. Because it’s tax-deductible

Along with a number of other expenses associated with having an investment property, landlord insurance premiums are tax-deductible.

How can landlords find the best cover?

As with any type of insurance, shopping around is the key to getting the best cover. While it’s crucial to check off a few key items in potential policies – such as the terms and conditions, what is and isn’t covered and the excess – there’s generally plenty of “wriggle room” in the actual pricing.

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