What is landlord insurance and what does it cover?


There’s huge money to be made investing in Melbourne property. However, there are also a number of risks that can prove costly if you’re not prepared for them. With that in mind, we’ve taken a closer look at landlord insurance for property investors so that you know what you need, what you’ll be covered for and how much it might cost.

What is landlord insurance?

When you become a landlord, you take on considerable responsibility. For example, it’s your job to maintain the investment property to a reasonable level, fix things if they break, manage the property and take care of the tenants. Plus, if an extreme weather event or natural disaster strikes, the cost of repairing or rebuilding will be on you.

That can mean hiring plumbers, builders, electricians and a number of other tradesmen over the life of your investment, all of which can become incredibly costly. What’s more, if your tenants leave without paying rent, you’ll have to keep covering the mortgage without any rental income.

Landlord insurance is all about covering you for those unlikely and unlucky incidents. You pay the same amount in premiums every month so that when something unfortunate does occur you don’t need to worry about it.

Are you handing your property over to a tenant soon? You’re going to need insurance.

What does landlord insurance cover?

Normal house and contents insurance are great for everyday homeowners but as a landlord you need cover for a range of extra risks. Most landlord insurance policies will take care of you in the event of:

  • Theft by tenants or their guests.
  • Legal expenses required to evict a tenant.
  • Malicious damage by tenants or their guests.
  • Loss of rent due to tenant default.
  • Most events covered by standard home insurance policies.

There are a few different types and levels of landlord insurance and it’s important that you speak to an expert or insurance broker to ensure that you get the cover you need.

How much does landlord insurance cost?

When buying landlord insurance, the cheapest option isn’t always the best. Some policies might exclude the cover you need, limit claim amounts or place strict conditions on what’s needed to make a claim. For that reason, it’s essential you take the time to understand what’s best for you, and get expert advice if you’re not sure.

According to Canstar’s research the average premium in Victoria costs $1,278 a year, or just over $106 a month. This price may vary according to your location, the details of the policy and risk factors, but if it’s considerably more it’s worth looking into why and/or shopping around for something more affordable.

If your property is damaged by weather, an accident or your tenants, landlord insurance will usually cover the cost.

What should I look out for when buying landlord insurance?

Before you buy you should read over your policy document at least once and make sure you understand what you’re covered for, what your premiums are and the process/costs associated with making a claim.

In particular it’s worth checking the following:

  • If the policy has a rent limit.
  • What type of tenant damage is covered.
  • If rent loss due to insured incidents is covered?
  • Whether or not damage by tenant’s pets is covered.
  • What your excess is, and if there is an excess per incident or per claim.

Take the time to understand what you need and choose the right policy and landlord insurance can be an absolute lifesaver. If you’re thinking about buying a new investment property it’s a great idea to speak to your current insurer or a broker to make sure you can have the right cover in place straight away when you buy.

For more helpful advice, and local tips on the property market drop into your local Nelson Alexander office for a chat today.

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