GUIDES & RESOURCES

Landlord Insurance Victoria

If you own an investment property in Victoria, landlord insurance could be one of the most important purchases you make.
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The Victorian government introduced new laws1 to make things easier for tenants – including the introduction of longer leases, greater flexibility, and pets. So, you want to have all the protection you can get in case things go wrong.

How does landlord insurance work in Victoria?

Landlord insurance is a type of insurance policy that protects you against some of the common risks associated with renting out your investment property:

  • Missed rental payments
  • Damage caused by tenants (or their guests)
  • Theft by tenants (or their guests)
  • Loss of rent if property becomes uninhabitable (due to fire or flood damage)
  • Lease break (when a tenant vacates the property before their lease expires)
  • Legal expenses associated with tenant disputes
  • Flood damage to fixtures and fittings
  • Explosions

But I already have building insurance – what’s the difference?

Many Victorians people get landlord insurance mixed up with building insurance, but building insurance only covers you for the structure of your property. Landlord insurance, on the other hand, covers you for loss of rent and damage or theft of permanent fittings and fixtures (such as carpets, blinds, appliances and light fittings) while renting out your property2.

How to get suitable cover for your needs

The key to getting adequate protection is making sure you’re insured for the risks most associated with your property. In Victoria, that could mean having cover for flood and fire damage. Or, if you intend to rent your property out for holiday lets across websites like Airbnb, having short-term rental landlord insurance.

Many of us think “it will never happen to us.” But remember the Great Ocean road bushfire in 2015? That blaze destroyed more than 50 homes, and burnt across 2,000 hectares of land3. So it’s important to be covered, even in the event of an incredibly rare and unlikely disaster.

How much does landlord insurance cost in Victoria?

How much your Landlord Insurance can cost will depend on several factors. For example, your policy may only cost a few hundred dollars if it’s a standalone landlord product, but it can be significantly more expensive if it’s a landlord policy which includes a building. And because your insurance cover for your investment property is likely an investment expense, your policy premium is tax deductible4 – a win, win all round.

The cost of landlord insurance tends to depend on the risks associated with your property and where it’s located. Insurers weigh up several factors, including crime rates, natural disaster zones and whether your tenants have pets to calculate your quote.

Obviously, the more expensive the policy, the greater the cost to your rental income. On the other hand, the cheapest policies don’t always provide the best value for money. So, it’s important to compare policies carefully.

Things to consider when choosing your landlord insurance policy

When it comes to landlord insurance for Victoria, it’s easy to take out a policy and assume you have adequate cover, but some policies don’t insure for very real risks such as malicious damage or loss of rent when your property becomes uninhabitable. That’s why you need to ask the right questions when shopping around:

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What’s the excess?

The excess is the amount you pay towards a claim. Often people see a higher excess as a means to reducing insurance costs. The problem here is that when you do make a claim, you’re expected to pay more towards it. And if you have to make multiple claims, your insurance premium can increase on renewal.

What’s included under the policy?

Make sure you pick a policy that doesn’t only cover for common risks, but also specific risks associated with your property:

  • Natural hazards prone to the area
  • Specialised insurance requirements such as strata insurance (if your property is on a strata title)
  • Damage caused by pets
  • Liability insurance, especially if your property has a steep driveway or slippery surfaces where a tenant or visitor can fall or injure themselves

Are there any restrictions to claims?

Always read the fine print of your policy by reviewing the Product Disclosure Statement. While you may be covered for loss of rent, for example, there may be limits to the amount you can claim or the length of time you can claim for.

Landlord insurance Victoria

Does the policy cover accidental damage or malicious damage?

While your tenants may be well-intended people, they may invite guests over who are less considerate.

Will you be renting your property out fully-furnished?

As properties tend to be rented out in Australia unfurnished, it’s usually the tenant’s responsibility to organise contents insurance. If you intend to rent your property out furnished, make sure your possessions are covered under your policy.

Looking for a suitable home and contents insurance policy?

Click here to view iSelect’s range of home & contents providers, and select the one which suits you.

Sources:
1. https://www.vic.gov.au/rentfair/pets-are-welcome.html/
2. https://www.consumer.vic.gov.au/housing/renting/using-a-property-manager/
3. http://www.abc.net.au/news/2015-12-25/great-ocean-road-fire-destroys-dozens-of-homes/7054028/
4. https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Rental-property-expenses/

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