Landlord's Insurance - Is it worth it?

Do you really need landlord insurance? Find out what landlord insurance covers and if its right for you.

Do you really need to purchase landlord insurance, or can you save money by avoiding it? These days we are shelling out for many different types of insurance left right and centre and the expenses of owning a home do add up, so it’s no surprise it’s one of the questions that property owners often want the answer to. 

So what’s the verdict? Below we will discuss things in more detail. 

What is landlord insurance? 

Landlord insurance is a type of home insurance that bundles together the basic coverage offered by a standard policy, with the additional protections that landlords need to protect their investment.

Based on your choice of cover, you can insure the building solely, just the contents, or both the building and contents.

What’s covered under landlord insurance? 

There are many different events or circumstances that landlords can be covered for through landlord insurance. 

Coverage can range to damage from fires and other natural disasters to lease-related incidents such as theft, malicious damage, vandalism, loss of rent due to tenant payment defaults and the legal costs involved in evicting tenants.

Choosing a policy for their investment property requires owners to take into account all of the usual aspects of coverage, as well as all the specifics that apply to their rental.

Is landlord insurance worth it?

If you're a landlord, you might be thinking your normal home insurance policy is enough to cover you but you'll definitely want to take out specific landlord insurance. And here's why…

To protect yourself in the event things go wrong with your tenant.

Landlord insurance provides the same protections as homeowners insurance, plus additional coverage for risks specific to landlords - such as protection against loss of rent and property damage caused by tenants.

Typical coverage includes:

  • Loss of rent due to tenant default
  • Theft or burglary by tenants (or guests)
  • Vandalism or damage caused by tenants 
  • Expenses associated with evicting a tenant

Coverage for Catastrophic Events

Being an Australian homeowner comes with some unique set of circumstances with, fires and floods also posing big risks to your investment property. A catastrophic event like this can leave you with a massive repair bill, and you may not be able to afford the rebuilding costs.

Tax Deductions

The costs of landlord insurance can range depending on the specifics of your property and sometimes this can be expensive but the good news is that typically, landlords are able to deduct their insurance premium from their taxes. 

To see what else you can claim on your investment, visit the ATO page on expenses you can claim relating to a rental property or check out our tax tips article here

Where can you get insurance coverage?

For any type of insurance, it is important to shop around for the best deal. Comparison websites that compare multiple policies are usually a good place to start. 

There are a few critical things to look for in potential policies, including the terms and conditions, what is and is not covered, and the excess. While some policies cover a wide range of events, others cover just a few. The right policy for you will also depend on your budget and the specifics of your home. 

The Product Disclosure Statement and insurer will have the full details so make sure you’ve read things carefully as each policy will be different. 

You need to make sure you know what’s covered so that you can make informed decisions about your level of protection.

A Cost You Won’t Regret. 

Even the most diligent landlord can fall victim to unexpected events that cause property damage. 

You might have the best tenants in the world but  they can cause damage to a property or fail to pay the rent. Circumstances change and, even if you're staying on top of regular maintenance and repairs, it won't always stop things from going wrong.

A landlord insurance policy can help you cover expenses related to these events. Ensuring you’re covered means a bit of peace of mind to know that you’ve got something to fall back on if something does go wrong and you’re not left hundreds (or thousands) of dollars out of pocket. 

The verdict - it’s definitely a cost you won't regret!