The Honey guide to landlords insurance in Australia

10 August 2022 6 mins
landlords insurance Australia

Landlord insurance is uniquely structured to help protect you from both property damage and financial loss. Here, we guide you through it.

Anna-Louise McDougall

Lord of your investment property? There’s more to being a landlord than just holding a sweet title. Whether you’re Game of Thrones–ing your investments in your property portfolio, or you’re a wide-eyed first-timer, having a thorough understanding of why the heck you need landlord insurance is pretty paramount.

Landlord insurance is uniquely structured to help protect you from both property damage and financial losses you might face. This could be as basic as separating the contents you left behind for your tenants, with their own – or thinking ahead in case your textbook tenants start throwing parties that look more like the running of the bulls.

So, before wading through the depths of insurance for landlords, we’re going to laymen–language it up. Here we get to the bottom of what it is, what it covers, what it costs and why you need it.

What is landlords insurance?

Landlord insurance is coverage to help landlords stay protected. It covers many of the usual incidents other property insurance covers, like fire or flood damage, or theft and vandalism. But the big difference is that there are landlord–specific features that home insurance doesn’t always touch.

This can include financial losses when you don’t have tenants or damage caused to the property by tenants. So yes, you may think that landlord insurance is just another expense that’ll eat into those glorious profits you’ve been dreaming of, but hold the phone. You don’t know what you’re missing until you have to fork out for the aforementioned disco damage – and you weren’t even invited.  

If you take out landlords insurance, you’ve got the peace of mind that your financial investment is protected. Whether there’s damage due to a storm or your tenants or covering the rent whilst the property is empty, landlords insurance is there to help.

What does landlords insurance cover?

Not all landlord protection insurance policies are equal, especially when it comes to what’s covered. It’s best to familiarise yourself with your specific policy’s policy documents to know what’s covered. Here are some benefits often included in a policy.

  1. Acts of nature

    Cover for acts of nature and natural disasters that includes fires, floods and storms.

  2. Building and contents

    The coverage included in a landlords insurance policy will depend on the type of property you have. For a house or other stand–alone property, Honey’s Landlords Insurance covers the building should loss or damage occur in the event of storms, flood, fire, theft, and vandalism.

    For strata property like an apartment, townhouse, or similar, some contents can be covered by landlord insurance because they’re yours, not the tenants. This might include the carpet, internal blinds, curtains, and furniture or furnishings you may have in the property. This is particularly important if you have a fully furnished property for rent.

  3. Damage and theft

    This cover could include protection for damage to the property caused by the tenants, and theft. Theft cover may protect you from both a robbery by your tenants and if the property is broken into.

  4. Legal liability

    For the building: You are covered for legal liability as an owner of the rental property to pay compensation for loss or damage resulting from an accident that occurs or arises at the insured address and which causes death or injury, or loss of or damage to property. For example, if you don’t repair a broken balcony railing at your rental property and someone falls through it and hurts themselves, then you may be liable to pay them compensation for that accident.

    For your contents: You are covered for legal liability if you are the landlord of a home unit that is part of a community title scheme or strata scheme made up of subdivided lots or units and common property, you cover your contents in the home unit, and the body corporate has insured your home unit for legal liability to pay compensation for loss or damage resulting from an accident which causes death or injury or loss of or damage to the property.

Always, always, always read the product disclosure statement (PDS), and don’t forget about considering those extras, like motor burnout for when your appliances decide to quit on your tenants. Be that landlord!

How much does landlords insurance cost?

This is the clincher, isn’t it? In a nutshell, the cost of landlords insurance depends on what’s included, what level of cover you take out, and the insurer. The other factor that impacts price will be the excess amount or out–of–pocket expenses you choose. You often select how much you want your excess to be when you take out your policy.

There’s no way to predict the exact cost of landlords insurance due to all the factors involved. How often you choose to pay your premium may impact its cost as many insurers charge more if you pay your premiums monthly, so be sure to check.

Choosing landlords insurance

Having any landlords insurance will protect you, but finding the right landlords insurance will ensure you have the coverage you need. You should make sure that your individual needs are met and not focus on the premium price.

The level of cover you need will be dependent on the type of property you own. A fully furnished house will need different insurance coverage than an unfurnished strata property.

  • A fully furnished house – A fully furnished house would need to have thorough building and contents landlords insurance. You want to make sure that your property’s covered and all contents.
  • An unfurnished house – An unfurnished house would need a complete building landlords insurance policy. But minimal contents landlord insurance policy that only covers the basics like carpet and attached fittings.
  • A furnished strata unit or townhouse or similar – Building insurance is included in your strata. This means you only need to cover contents, especially if you rent the property fully furnished. You may want to consider strata protection cover to fill any gaps in your strata’s building insurance.
  • An unfurnished strata unit or townhouse or similar – you’d only need contents landlords insurance. With the possibility of strata protection cover to help protect the building.

How do I compare landlords insurance?

Comparing can include looking at the features and what is or isn’t covered. This is best described in the Key Facts Sheet and PDS of each policy. You should ask yourself what you need your policy to provide. Consider looking at:

  • Your investment property’s current market value and what it’ll cost to rebuild or replace the property.
  • The contents you’re leaving in the property and the value of these items.
  • The risks of any of the insured events, from fire risk to flood risk to tenant damage or financial loss. What’s the possibility of you making a claim? This impacts the level of cover you get and may affect the premium you pay and any additional excesses.

Where we’ve landed

So, now we know what landlord insurance is, what’s covered, how to determine your cover, and how to compare cover. Yep, it’s a lot. That’s why trained professionals like the Honey team exist, to help you out when you don’t know your fixtures from your fittings.

If you still have a significant amount of questions like, “can I cover my AirBnb with Honey”, or, “Sorry, but can you explain what an excess is one more time?” We have compiled all the FAQs we could think of right here.

Think you’re ready to start protecting your biggest investment? Our smarts make it easy for you to get your property covered, how you want, and on your budget – in minutes.

Right this way.

Don’t forget to read the fine print

Insurance issued by RACQ Insurance Limited ABN 50 009 704 152, AFSL 233 082 and distributed by Honey Insurance Pty Ltd ABN 52 643 672 628, AFSL 528244. Conditions, limits and exclusions apply. This is general advice only and does not take into account your personal objectives, financial situation or needs and may not be right for you.  Always read the PDS, any applicable SPDS and TMD available at before making any decision.

Anna is Honey’s resident copywriter and product marketer, responsible for making insurance make sense. When she’s not grammar policing, she’s being her own devil’s advocate; could it read better, could it help more people, how much Honey is enough?

Anna-Louise McDougall

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