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Like Home and Contents Insurance, Landlord Insurance exists for when the unexpected happens. With it, you may be able to minimise the financial damage done if you can’t rent out your property for a time or your tenants default on their rent. Depending on the policy, it may also help soften the blow of other potential mishaps. Essentially, it could be a way for you to take some of the risk out of your property investment.
Landlord Insurance isn’t a must in NSW (or anywhere else in Australia actually). However, something doesn’t need to be enforced to be a good idea. After all, who knows what the future holds for you, your rental and your tenants.
Plus, there are a few quirks of NSW rental law that could mean Landlord Insurance gives you a bit more peace of mind. For instance, if your tenant needs to break their lease to escape domestic violence, they can do so immediately and without needing to pay the mandatory break fees.1 Landlord Insurance may then be able to help cover this period of unexpected occupancy until you find another renter.
Or say you consent to your tenant keeping a pet at the property. Unfortunately, even the best-behaved pets can cause damage to a rental, like chewing or scratching something they shouldn’t. But you can’t legally ask for a higher bond to help repair the potential damage caused.2 Instead, Landlord Insurance with coverage for pets could manage the costs of Fluffy or Fido doing their own renovations (to an extent anyway).
Landlord Insurance and Building Insurance are two different types of insurance. Generally:
However, there can be some crossover with what different policies cover. You might find your property’s Building or Home Insurance includes elements of Landlord Insurance or you might need to take out an additional policy.
If you’re dealing with a strata property, like an apartment, things can get even murkier. This is because NSW strata owners corporations must have Building Insurance and Public Liability Insurance. However, this may only cover communal areas or shared parts of the building. Further, even if a common property issue damages parts of your rental or the contents, this strata-owned insurance may not apply.3, 4
So whether it’s a burst common pipe or a once-in-a-lifetime earthquake, you could be stuck dealing with the financial aftermath - including being unable to lease it for a time. But if you had both Landlord and Building Insurance, you could get a degree of coverage for the damage to the property along with the loss of rent.
As a rule of thumb, you can claim your Landlord Insurance premiums on your tax.5 However, it can only be for the time when your property is genuinely available for rent and for the parts of the property that rent covers.6 Clear as mud, right? Essentially, it’s probably not a good idea to claim the time you use it as a holiday home or for parts of the house that you still use if you’re only renting out a bedroom.
Ultimately, your policy will explain exactly what your Landlord Insurance covers and there can be variation between different policies. However, there are a few things you’d expect to see pop up when comparing Landlord Insurance, like:7
If you want, you can read through the Product Disclosure Statement (PDS) to see when and where you’re covered.
There are Landlord Insurance Policies that cover theft, whether it’s your tenant or a visitor of theirs taking something from your rental. If you ever do need to claim for this, it’s a good idea to let the police know about the incident as well — it might even be a requirement to do so to get your claim processed.8
As you’re comparing Landlord Insurance, you might notice some further common ground between policies. This time it’s what they don’t cover, like:
Slogging your way through PDS after PDS can be a dry way to spend a day. But we might be able to make things a little easier. With our online comparison tool, you can check out various Landlord Insurance Policies from a range of different providers in just a few minutes.* Alternatively, if you want to chat through your options, we have a team waiting for your call at 13 19 20.
1 NSW Fair Trading - Changes to the residential tenancy laws
2 NSW Fair Trading - Starting a residential tenancy
3 NSW Government - Managing strata finances and insurance
4 As above
5 Australian Taxation Office - Rental expenses you can claim now
6 Australian Taxation Office - Rental expenses to claim
7 Forbes Advisor - Landlord Insurance In Australia: What You Need to Know
8 Budget Direct - Your Home and Contents Insurance Policy Product Disclosure Statement, p55
9 NSW Government - Landlords’ and tenants’ rights after an emergency
10 ING - Home and Contents Insurance Product Disclosure Statement, p55
11 Budget Direct - Landlord Insurance