Compare Landlord Insurance

Keep reading to learn more about Landlord insurance, including how it works and what’s covered. See if you can find a better deal with iSelect.
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So you want to be a landlord? Smart! You’re probably thinking that investment properties can be a great way to earn extra money or help pay off a mortgage. You’re probably not thinking about what could happen if your tenants caused serious damage to your property, or suddenly abandon it, leaving you with the cost of removing their things and finding new tenants. In this article we’re covering landlord Insurance – a type of home insurance that’s designed to be a safety net to help landlords just in case the worst happens.

What is Landlord Insurance?

We all like to assume the best in people, but the truth is that situations with tenants can very quickly turn ugly, leaving landlords to pick up the pieces. Landlord insurance policies are taken out by property owners to help cover a variety of risks that come with renting out a property. These events can include things like:

  • Theft and burglary by tenants, or their guests;
  • Damage to your property, or the permanent fittings and fixtures you’ve added, caused by tenants or their guests;
  • Loss of rent due to a tenant defaulting on rental payments. However it’s important to note that there could be exclusions around this benefit due to COVID-19;
  • Legal expenses associated with tenant disputes, such as if you have to evict a tenant;
  • Damage to permanent fitting and fixtures from an explosion, fire or flood;
  • Loss of rent if your property is uninhabitable due to repairs from certain events.

While all policies are different and it’s important to check the Product Disclosure Statement to understand exactly what is included and excluded on your chosen policy. 

How is it different from other types of home insurance?

Home and contents insurance helps cover your home, as well as the valuable contents inside of it, in the event that things are damaged or stolen. Landlord insurance, sometimes called investment property insurance, falls under the home and contents insurance umbrella, but is designed specifically for people renting out their property.

Another type of insurance many homeowners might have is landlord building insurance, which typically provides cover for loss or damage to your home caused by unexpected events such as fire, storm and flood.

These types of policies can help protect you in the event of something accidental happening to your home, but they usually won’t cover landlords if their tenants cause significant damage to their property. Or if your tenants suddenly up and run, leaving you with the sudden responsibility to fill your property with new renters. That’s where landlord insurance may be able to provide coverage.

You may be able to find a policy that includes both building insurance and landlord insurance, or you might find it makes more sense for you to take out two separate policies.

It’s also important to remember that building insurance and home and contents insurance policies on their own aren’t designed to cover any items your renters bring onto your property. Your tenants may decide to look into renters insurance to protect their own belongings.

But my tenants pay a bond. How is this different?

Requiring tenants to pay a bond is standard practice in Australia. In most states, a bond is often equal to four months of rent. In many cases, tenants will leave their property without significant damage, or with small damages that can be covered by the cost of the bond. But in the case of major damage, that bond money could be eaten up very quickly. Plus, if repairs take more than a few weeks, you could miss out on incoming rent. Landlords insurance could provide additional financing to help with repairs that exceed bond payments and could help to pay missed rental income. This help could be the crucial difference that keeps you on top of mortgage payments. 

How much can it cost?

Different factors can impact the cost of your policy. Before you get a landlord insurance quote, it may be beneficial to consider the following:

  • Level of insurance: you may only decide to cover the risk of physical damage to your property. However if you’re furnishing the property, you might consider adding contents insurance to your policy. Keep in mind that items like carpets, curtains, and appliances are considered furnishings.
  • Pets: You could have the most responsible tenants in the world, but if they have a pet, the risk of damage goes up. So if you rent out a property and the owners have pets, it could impact the cost of your policy;
  • Specific risks: if your property is at a higher risk for flooding, bushfires, or other disasters that can cause significant damage, your policy could be more expensive;
  • Who is covered: Depending on your policy, you may be able to choose to cover just your tenants, or your tenants and their guests. If only your tenants are covered, any damage or theft by the people they invite into the home won’t be covered;
  • Location: If your property is located in an area with a lot of crime, or one that’s prone to flooding, it could impact the cost of your policy. You can call your local council to find out if your property is located in a flood, fire or cyclone zone.

It’s important to remember that, as with most insurance, the cheapest policy may not be the best. For example, if you’re worried about your home flooding, it could save you money down the track to include that type of protection in your plan. Before you commit to a plan, you should read the Product Disclosure Statement which will outline the details of your policy.

What isn’t typically covered by landlord insurance?

Your policy will likely come with exclusions which will be outlined in the Product Disclosure Statement. These will depend on the level of cover you choose and your policy. Typical exclusions on a landlord insurance policy can include:

  • Malicious damage (potentially due to the impact of COVID-19)
  • Tenant default (potentially due to the impact of COVID-19)
  • Movement of the sea;
  • Falling trees;
  • Vermin;
  • War and uprising.

What about short-term properties?

If there is risk associated with renting out your property for long-term leases, you can only imagine the potential risk of renting out to dozens (or even hundreds) of people every year. Homeowners who use sites like AirBnB, Stayz, and to rent their homes to people on holiday or in need of a place to crash in the short term are also candidates for landlords insurance. It’s likely you will need to disclose this to your chosen insurer.

Does it differ by state?

Absolutely. Before you start comparing insurance policies, get to know how Landlords Insurance works in your state:

How can I get the most out of my policy?

If you’ve ever rented a property, you know that some landlords are better than others. Being a good landlord isn’t just good for the tenants, it can also help you maximise the return on your investment property and maximise your landlord insurance policy. Here are a few helpful tips on how to do just that:

  • Communicate: keep the lines of communication open and make sure your tenants feel like they can talk to you if something isn’t looking right.
  • Conduct Inspections: talking is great, but it’s important to see your property in-person from time to time. Just make sure you’re not showing up unannounced or violating other consumer laws.
  • Keep reports: taking photographs between tenants and keeping a log of any issues will help your case if issues do arise.
  • Screen tenants: before you let someone move in, check their references and look into their rental history for any red flags.

Having a landlord insurance policy before you start renting it out could be beneficial, as damage done to your property before it’s insured likely will not be covered.

How to choose a Landlord Insurance policy

If you’ve read this far, you probably understand that not all landlord insurance policies are created equal. So before you commit, it’s a good idea to compare policies. At iSelect we’re here to help! With our comparison service you can compare landlord insurance and other kinds of home insurance from our range of policies, and even switch policies, all at no added cost to you. Call us on 13 19 20 and one of our friendly team can help walk you through it.