Landlord insurance demystified in under 3 minutes

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The self-management myth debunked

This insurance gives landlords protection for financial loss, accidental damage and legal liability, but we qualify that below. You may also be able to tap into millions of dollars of coverage when it comes to public liability insurance, for example, and up to thousands of dollars for other inclusions. If you self-manage and a catastrophe strikes, you could be significantly out of pocket if you don't have the right policy. Consider how far your bond will go to recover your losses if a tenant's at fault.

In 2018, just 30,000 such claims were made, according to the Insurance Council of Australia. Most claims are for storm, flood or water flood damage, rent default and theft.

You're probably not covered for COVID-19 rent defaults

Generally, property owners who've taken out a policy after 28 March 2020 are unlikely to be covered for rent default. Insurers have made this move to stem their losses given the pandemic's impact. As your broker/adviser, we can update you on any changes to your landlord insurance, such as whether the rent default coverage changed when you renewed your policy.

Check with your state or territory government to see if they offer rent assistance measures. The moratorium on evicting tenants (except for those in social housing) will end on 26 March 2021. This means that most new landlord insurance policies won't cover you for tenant-related risks that prompt you to end the lease early.

Benefits of landlord insurance

There's a lot, though, that landlord insurance could cover including:

Any type of investment property including a house, unit, townhouse (and the land they're on) or apartment
Events causing you to lose rental income
Theft or damage to your property by the tenants or their guests
Damage from storms, fire, lightning, floods, water, fallen trees, earthquakes, vandalism, explosions, vehicle collisions
Public liability (up to $20M) covering death, injury or damage to the tenant on the property where the landlord is found responsible
Possibly the replacement of deadlocks

What won't be covered

Importantly, landlord insurance is unlikely to cover:

The difference between the pre-COVID-19 rent and a discount you might have offered the tenants (insurers don't see that as a rent default)
Loss of rent or rent default post COVID-19
General wear and tear
Damage by insects or rodents
Where you breach the tenancy agreement
Where you or someone you instruct damages the property
Parts of the property you don't rent (for example, you might store your belongings in the garage and don't give tenants access to it).

Insured property value isn't its market value

As your broker/adviser, we can guide you on tweaking your coverage, depending on the agreed or market value of your property and contents, as well as the excess you're comfortable paying. Here are some great tools to calculate your assets' values to make sure you're not under-insured. We help you navigate through the inclusions and exclusions to find the exact insurance policy for your criteria.

Importantly, we abide by the Insurance Brokers' Code of Practice, so we work for you as our client, not a particular insurance company. That means we'll never 'set and forget' your insurance and will always keep you updated on fine print changes.

The information provided in this article is general advice only, and is not intended to be a substitute for legal or other advice. General Advice is advice that has been prepared without considering your current objective's, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of the advice having regard to your current objective's, financial situation or needs. Read our complete general advice warning