What Is Landlord Insurance and Why Should You Get It?

We take out all kinds of insurances because we want to be prepared for unforeseen eventualities. For property owners, there are specific insurance policies to help you prepare and keep your investments secure. 

Link up with a licensed professional 

However, before you even begin to consider what type of landlord insurance to choose, you want to make sure you’re making this decision with the best possible people. The Corporations Act which is regulated by ASIC (Australian Securities and Investments Commission) dictates that all companies or individuals who provide financial advice or deliver a financial service must be licensed under the Corporations Act. 

How is this different from home insurance? 

Landlord insurance policies take into consideration the risks you face as a property owner and investor and not necessarily as a resident. Landlord insurance also covers the property owner for tenant-related risks that are not covered by home insurance or body corporate/strata fees. 

Location 

It is also wise to consider the location of the investment property when taking out landlord insurance. For example, if the property is in Queensland, it is good to remember that North Queensland has been impacted cyclones and floods. Properties located in disaster-prone areas are at higher risk of damage and without an effective insurance policy in place, property investors could face significant costs out of their own pockets. 

Inclusions and exclusions 

Typically, a landlord insurance policy will cover: 

• Theft or burglary by tenants, their guests or other burglars 
• Malicious damage or vandalism by tenants or their guests 
• Loss of rent due to tenant default or breaking of the lease 
• Legal expenses required to evict a tenant 
• Damage caused by disasters (i.e., floods, storms, fires)

Other inclusions to consider are: 

• Damage caused by a tenant’s pet 
• Public liability cover for injury to someone visiting your investment property 
• Rent loss due to an insured event, such as a tenant defaulting on their rental payments the death of a sole tenant or the eviction of a tenant by court order   
• Re-letting expenses after a claim on rental loss 
• Removal of a tenant’s goods after a claim on rental loss 
• Change of locks after a claim on rental loss 
• Eviction of your tenant by court order 
• Unexpected death of tenant 
• Default (your tenant refusing to pay rent) 

Meanwhile, common exclusions include: 

• General maintenance expenses or the costs of repairs by the tenant 
• Rental income due to not having a tenant 
• General wear and tear

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