Why Do I Need Landlord Insurance?

Landlord insurance is a specialised type of cover designed to protect investment properties and the income they generate. Unlike standard home insurance, it includes protections specifically for renting, such as tenant-related damage, loss of rent, and liability risks.

It serves as a financial safety net, keeping the rental experience predictable and helping you stay in control when things don’t go to plan.

For landlords, this means that even if your tenants are fantastic and the tenancy is stress-free, there are external risks completely outside your control that can lead to sudden, significant costs. Tenant actions, severe weather events or other unexpected outcomes can make a property uninhabitable, trigger urgent repairs, and cause immediate loss of rental income,  often all at once.

Landlord insurance bridges that gap. It acts as a financial buffer so you can recover quickly, minimise disruption, and maintain professionalism throughout the process. Instead of reacting from a place of stress, you’re equipped to respond calmly and decisively, knowing the key parts of your investment are protected

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Yes and that’s exactly why it exists. A standard home insurance policy covers the building and, in some cases, the contents, but it does not cover risks that come with having tenants. Landlord insurance typically adds protection for:

• Malicious or intentional damage. If a tenant (or their guest) causes deliberate harm to the property, a standard home policy won’t cover it.
• Loss of rental income. If the property becomes uninhabitable after an insured event, or if a tenant is legally evicted, landlord insurance can compensate you for lost rent. Home insurance offers nothing in this scenario.
• Theft by tenants. Depending on the policy, landlord insurance can cover stolen items such as appliances, furniture (for furnished rentals), or other contents owned by the landlord.
• Legal liability related to tenancies. If someone is injured at your rental due to a hazard, landlord insurance can cover the legal and medical costs, a critical protection for self-managing landlords.
• Legal expenses for certain disputes. Some policies include cover for court costs or tribunal matters arising from tenancy issues.

Landlord insurance recognises that renting is a business activity, not just a home. The risks are higher, more varied, and often tied directly to the behaviour of tenants or the requirements of tenancy law.

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Loss of rent is one of the biggest financial risks for landlords. Landlord insurance can cover lost income when:

• The property becomes uninhabitable after an insured event
• A tenant leaves unexpectedly due to major damage
• A tenant is legally evicted
• Certain legal disputes prevent normal renting

A few weeks of vacancy can be stressful on its own. In a worst-case scenario, such as a storm making the home unsafe, the financial impact can be significant. Insurance helps you absorb that shock so you can recover faster.

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Read more: How to Reduce Your Property Management Expenses

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Most tenancies run smoothly, especially when communication is clear and direct. But it only takes one incident to create a major unexpected cost.

A survey by QBE Insurance found that 30% of landlords reported property damage caused by tenants, and 61% of those damages ended up being claimed through insurance. This shows that even in generally positive tenancies, accidents and unexpected issues are common enough to create significant financial pressure.

Landlord insurance protects you against accidental damage, malicious or intentional damage, and,  depending on the policy, theft by tenants or their guests. This isn’t about expecting the worst from your tenants; it’s about being prepared for the unpredictable moments that happen in any home.

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As a landlord, you carry legal responsibility for the safety of your rental property. If someone is injured due to a hazard like a loose handrail or broken step, you may be held liable.

Landlord insurance provides legal liability cover, protecting you from claims involving medical costs, legal fees, and compensation payouts. For self-managing landlords, this protection is crucial. It gives you peace of mind knowing you’re covered if something unforeseen happens.

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Landlord insurance costs vary widely across Australia, largely due to differences in weather risk, location, and property type. According to Canstar’s 2023 analysis, the average annual premium for a house with both landlord and building cover costs around $2,060, while units tend to be far cheaper because strata covers much of the building.

Here’s a quick look at the average premiums by state:

Units (annual average):

• NSW: $391
• VIC: $347
• North QLD: $647
• QLD (rest): $341
• SA: $324
• WA: $373
• TAS: $319
• NT: $606

Houses including building insurance (annual average):

• NSW: $2,056
• VIC: $1,769
• North QLD: $5,159
• QLD (rest): $1,957
• SA: $1,544
• WA: $1,702
• TAS: $1,585
• NT: $3,419

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These figures highlight just how much location influences premiums. Regions exposed to severe weather, particularly North Queensland, parts of NSW, and the Northern Territory, see significantly higher costs due to higher claims from storms, floods, and cyclones.

Even so, many landlords find that the cost of insurance is relatively small compared to the financial impact of an unexpected event. A single incident involving malicious damage, weather-related repairs or loss of rent can exceed the entire premium several times over.

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Absolutely. When you self-manage, you’re the one handling maintenance, communication, agreements, and risk. Insurance strengthens your position by giving you:

• More control
• Fewer financial surprises
• Confidence in emergencies
• A more stable renting experience

It also supports your ability to act quickly and professionally if something goes wrong, which helps maintain trust with your tenants.

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In practice, yes. Good landlords operate like small-business owners: they protect their assets, respond quickly, and look after the people who rely on them. Insurance helps you uphold that standard by ensuring you have the resources to fix issues promptly and keep the property safe.

When tenants see you respond quickly and professionally, relationships strengthen and tenancies last longer.

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Read more: What Are the Legal Responsibilities for Self-Managed Landlords?

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