A standard home and contents insurance policy is designed for owner-occupiers. If you rent out a property — whether a house, apartment, or granny flat — standard home insurance will almost certainly not cover the risks that actually matter to you as a landlord. Tenant-related claims for rental default, malicious damage, or theft by tenants are explicitly excluded from most standard home policies. Landlord insurance exists specifically to cover these risks.
| Risk | Standard home insurance | Landlord insurance |
|---|---|---|
| Tenant stops paying rent (rental default) | Not covered | Covered (typically 6–15 weeks of rent) |
| Tenant intentionally damages the property | Not covered (intentional acts by residents excluded) | Covered up to a specified limit |
| Theft of landlord's fixtures by tenant | Not covered | Covered |
| Loss of rent while property is uninhabitable after a claim | Sometimes included for owner-occupier scenarios; not designed for rental income | Specifically included |
| Legal liability as a landlord (e.g. tenant injured on property) | Partially — standard liability cover may apply to the structure | Included with landlord-specific liability extensions |
| Re-letting costs after a tenant vacates mid-tenancy | Not covered | Sometimes included |
| Stormwater and accidental damage to the building | Covered | Covered |
Rental default cover — which pays your rental income if a tenant stops paying — is the policy benefit most landlords focus on, and the one with the most conditions. Most policies require: the tenancy is covered by a formal written lease; the property is managed by a licensed real estate agent (some policies exclude private landlords); you have attempted to recover arrears through the appropriate tribunal process; and you have complied with your state's tenancy legislation in all material respects.
If you manage the property yourself without a property manager, check very carefully whether rental default cover is included or excluded. Several major landlord insurance providers restrict this benefit to professionally managed properties, on the basis that an agent's credit checks and formal lease management reduce default risk. If you self-manage, confirm the policy explicitly includes default for private landlords.
Rental default and tenant damage claims typically require supporting documentation: a signed lease, a condition report at tenancy commencement, and evidence that proper notice and tribunal processes were followed before you vacated the tenant. Without this documentation, a claim may be declined regardless of whether the policy technically covers the event. Treat your tenancy paperwork as claims evidence from day one.
Most landlord policies distinguish between accidental tenant damage (genuinely unintentional) and malicious damage (deliberate). A hole punched in a wall at the end of a difficult tenancy is malicious damage. A carpet stained during normal use is wear and tear (not covered). A broken window from a football is accidental damage. These are assessed by the insurer's claims team and the distinction matters because some policies cover malicious damage with no excess while others apply a higher excess for malicious damage claims.
Wear and tear is never covered — not by landlord insurance, not by any property insurance. The bond is the mechanism for wear and tear beyond normal use; landlord insurance is for events that exceed what a bond covers. If a tenant leaves a property in poor condition but the damage is characterised as wear and tear, a landlord insurance claim is unlikely to succeed.
Landlord insurance covers the building structure and fixtures that belong to the landlord — built-in appliances, fixed carpets, light fittings, and so on. It does not cover the tenant's personal belongings. A tenant needs their own renters/contents insurance for their possessions. This distinction matters when a tenant queries whether the landlord's insurance covers their laptop after a break-in. It does not — and any landlord who implies otherwise is creating a misunderstanding that can become a dispute.
Landlord insurance premiums are generally tax-deductible as a rental property expense under section 8-1 of the Income Tax Assessment Act 1997, to the extent the property is available for rent. The deduction applies in the year the premium is paid (for annual policies). At a 37% marginal tax rate, a $1,200 annual landlord insurance premium costs approximately $756 after the tax benefit. Confirm the deductibility position with your accountant, particularly if the property is used personally for part of the year.
Check whether your investment property insurance is adequately priced and structured for your rental situation.
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