Rent Default Insurance

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What is rent default?

What is rent default insurance?

What can rent default insurance cover?

What’s not covered by rent default insurance?

Is rent default insurance worth it?

Need a larger safety net? Landlord insurance is for most rental-related issues

Why should I get rent default insurance?

Long story short

Rent default insurance protects your rental income

If a tenant suddenly stops paying rent, rent default insurance can help cover unpaid amounts and unexpected losses, helping to keep your rental income steady.

It covers more than just unpaid rent

It can also step in for lease breakage, tenant deaths, and even legal costs – giving you a comprehensive plan B as a landlord.

There are exclusions you need to know

Normal vacancy, unreported issues, and commercial leases aren’t covered. It’s worth checking your product disclosure statement (PDS) to dodge any surprises later.

It’s a small price to pay for bigger head space

Rent default insurance helps shield your finances and keeps your property profitable during unforeseen events.

It’s often an add-on to landlord insurance

Rent default is commonly optional in landlord insurance policies, not automatic. It’s a good idea to double-check with your provider and ensure it’s included.

What is rent default?

Being a landlord comes with its fair share of worries, and rent default is often high on the list. It’s what happens when your tenant doesn’t pay their rent – whether they’re late or stop paying altogether.  

If your rental income helps cover the mortgage, upkeep, or other costs, an optional rent default cover might just be worth a look. 

If you’ve looked into landlord insurance, you may have seen both optional coverage for rent default and loss of rent. While they sound similar, these two cover very different scenarios: 

• Rent default is when the tenant, for any reason, fails to pay rent as required under the lease.
• Loss of rent relates to situations beyond your tenant’s control, such as natural disasters, property damage, or when the property becomes uninhabitable.  

What is rent default insurance?  

Rent default insurance is a specific type of coverage that can be offered as part of a comprehensive landlord insurance policy or as an optional add-on.   

Also called ‘landlord tenant default’, it protects the landlord if their tenant breaks their lease or misses rent payments unexpectedly.  

Depending on the level of coverage, it can reimburse the landlord for unpaid rent and, in some cases, legal expenses incurred while chasing up the tenant.   

This type of insurance cover can be a lifesaver for those unexpected moments when even the best tenant on paper defaults.   

What can rent default insurance cover?

While policies vary between providers, here’s a snapshot of what rent default insurance generally covers: 

What’s not covered by rent default insurance?

Even the most comprehensive rent default insurance can have its own set of exclusions, like the following: 

If there’s no written lease or rental agreement in place when the tenant’s living at your property

Legal expenses that haven’t received green light from the insurer 

If a sole tenant passes away but had already given notice before their death

Is rent default insurance worth it?

For many landlords, yes.   

To put things in perspective, imagine this scenario: 

Riva secured a tenant for her Brisbane apartment. They’ve been reliable for a year, but suddenly they’ve stopped paying rent. No reason, no responses.  

Two months later, they’ve vanished without a trace, leaving Riva with unpaid rent and weeks of vacancy ahead while searching for a new tenant.   

Thank goodness Riva got rent default insurance! She could claim the unpaid rent and recover part of the costs associated with her tenant disappearing.  

Without it? That financial burden falls squarely on her.   

For a small additional premium, rent default insurance acts as a financial buffer, giving landlords peace of mind and ensuring their investment property remains profitable – even during tough times.   

Need a larger safety net? Landlord insurance is for most rental-related issues

If you’re exploring rent default insurance, chances are you’re already familiar with landlord insurance. This broader policy is typically part of home insurance but for landlords.¹For more information, see Moneysmart – Home insurance

We know being a landlord can be tough. Landlord insurance can ease your worries and anxiety around renting your property. It protects your property and income against a variety of potential problems, from tenant-related damage (accidental or otherwise) to legal liability for injuries or damage occurring on your premises. 

Helpful tip:

Landlord insurance and rent default coverage often get lumped together, but they’re not the same thing. Landlord insurance is a broad safety net – it covers your property against damage and legal liabilities. Rent default, on the other hand, is a specific add-on that kicks in if a tenant stops paying rent under certain conditions, like breaking the lease or being evicted.  

Rent default is often offered as an optional extra in landlord insurance policies, and not always automatically included. If you’re renting out a property, it’s prudent to check your policy and whether it includes rent default so there are no surprises down the line. 

Adrian Bennett

General Manager for General Insurance

Why should I get rent default insurance?

Rent default insurance isn’t just an additional cost; it’s an investment in protecting your rental property income. If you’re a landlord, rent default cover can save you from significant losses.  

You can explore from our range of policies with us so you can check which landlord insurance has rent default as an optional coverage.