Standard home and contents insurance does not cover rental properties adequately. The moment you rent your home to a tenant, your exposure changes and most standard policies either exclude or significantly limit the cover that matters most to landlords. Landlord insurance fills that gap, but the products vary enough that it is worth understanding what you are buying before you choose a policy.
A comprehensive landlord insurance policy typically bundles several types of cover. The most important ones are as follows.
Building cover. This insures the physical structure of the property against events such as fire, storm, flood, and water damage. It works similarly to standard home insurance, though some policies limit certain perils in higher-risk areas. The sum insured should reflect the full rebuild cost of the property, not the market value. Rebuild costs are typically lower than market value in most areas, but not always, particularly on older properties with unusual construction.
Loss of rent. If your property becomes uninhabitable due to an insured event (a fire, for example), most landlord policies will pay the rental income you lose while the property is being repaired. This cover is usually capped at a percentage of the sum insured or at a fixed dollar amount per week for a set period, typically 12 to 52 weeks depending on the policy.
Tenant damage. This covers damage caused by tenants beyond normal wear and tear, such as holes punched in walls, stained carpets, broken fixtures, or deliberate destruction. This is the cover that most standard home insurance policies exclude entirely. Not all landlord policies cover tenant damage equally, so the specific wording matters.
Malicious damage. Some policies separate tenant damage from malicious damage (intentional destruction). Others bundle them. If yours separates them, make sure both are covered, because the distinction can become relevant at claim time.
Liability. If a tenant or their guest is injured on your property and sues you, liability cover pays your legal costs and any damages awarded. Most policies offer at least $10 million in public liability cover. This is increasingly important as compensation claims for property-related injuries can be substantial.
Loss of rent due to tenant default. Separate from the rent-loss-due-to-damage cover above, some policies also cover you when a tenant stops paying rent and refuses to leave. This cover is limited and usually capped at around six to eight weeks of rent, and it typically requires you to have followed the correct tenancy tribunal process before claiming.
The exclusions are where landlord policies vary most, and where many claims get rejected. Common exclusions to check carefully include: gradual deterioration or maintenance issues (a leaking roof that was not repaired promptly is often excluded), damage caused by the landlord themselves, properties left vacant beyond a certain period (typically 60 to 90 days), damage from pest infestation, and claims arising during periods when the property was not legally rented under a formal lease agreement.
Some policies also exclude flood damage or limit it, which is especially relevant for properties in Queensland or parts of NSW and Victoria. Read the PDS carefully on this point if your property is in a flood-prone area.
Landlord insurance premiums in Australia range from around $200 per year for a basic apartment to $1,500 or more per year for a large house in a high-risk area. The main variables driving cost are the property type and value, the state you are in (Queensland and Northern Territory tend to be more expensive due to cyclone and flood risk), whether you choose building cover only or building plus landlord-specific covers, and the provider.
For a typical three-bedroom house in Sydney or Melbourne insured for a rebuild value of around $500,000 to $700,000, a comprehensive landlord policy (building, loss of rent, tenant damage, liability) typically runs somewhere between $1,000 and $1,400 per year. Apartments on strata title cost less because the building structure is usually covered by the body corporate, meaning you typically only need landlord contents and liability cover, often $300 to $600 per year.
The core difference is in what triggers a claim. A standard home insurance policy is designed for an owner-occupier. It covers your possessions and your property against accidental damage and defined events. It does not expect a third party (the tenant) to be causing wear and potential damage to the property. Accordingly, most standard policies either exclude tenant damage entirely, or cover only damage from insured events that would apply to an owner-occupier anyway (fire, storm, flood), not damage from the occupancy itself.
Landlord policies price in the tenant exposure and include loss of rent, tenant and malicious damage, and liability for the rental relationship. Some insurers market standard home insurance with a "rental extension," but these are usually inferior to a dedicated landlord policy, particularly on tenant damage and rent default cover.
The specialist landlord insurance providers that come up most often in the Australian market are EBM RentCover and Terri Scheer, both of which are dedicated landlord insurance products rather than general home insurance with an add-on. EBM RentCover is particularly well known among property managers and typically performs well on tenant damage and rent default claims. Terri Scheer (underwritten by Allianz) is another specialist product with strong brand recognition in the market.
Mainstream insurers including CGU, Budget Direct, NRMA, and Suncorp also offer landlord policies. These can be cheaper for building cover alone, but the specialist providers often have better cover for the landlord-specific risks (tenant damage, rent default) that are the main reason to take out the policy in the first place. Price alone is not the right metric here.
Underinsurance in rental properties is widespread. The most common cause is a sum insured that has not been updated to reflect current rebuild costs. Construction costs in Australia have risen significantly since 2020. A property insured for $400,000 in 2019 may cost $550,000 or more to rebuild today. If you make a total loss claim and the sum insured is 30% below the actual rebuild cost, you bear that 30% gap yourself.
The second cause is taking out building-only cover to reduce premiums, and discovering at claim time that the landlord-specific covers (tenant damage, loss of rent) were not included. Ask your insurer or broker exactly what is and is not covered before you commit, not after you need to make a claim.
Reviewing your sum insured every year at renewal, and checking whether your building covers or excludes the specific landlord risks, takes about 15 minutes. It is one of the more valuable things you can do as a property investor.
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