Landlord insurance protects a rental property against risks a standard home policy does not, such as loss of rent, tenant damage and legal liability as a landlord. For a house it usually combines building and landlord contents cover. For a unit, the building is covered by the strata policy, so you typically only need landlord contents and liability cover, which is much cheaper.
Key takeaways
- Landlord insurance is different from home insurance. A standard home policy may not cover a tenanted property.
- Unit owners usually pay far less because strata insures the building.
- Loss of rent and malicious damage cover vary a lot between policies. Read the limits.
- Premiums vary widely. Get quotes every year.
What landlord insurance usually covers
- Building (houses and townhouses not under strata): fire, storm, flood if selected, and other listed events
- Landlord contents: carpets, curtains, blinds and appliances you supply
- Loss of rent: rent you lose while the property is unliveable after an insured event, and in some policies when a tenant defaults
- Malicious damage and theft by tenants
- Accidental damage, on some policies
- Legal liability if someone is injured at the property
Common exclusions
- Normal wear and tear
- Damage the bond already covers
- Rent default where the tenant was in arrears when the policy started
- Pets and unapproved occupants, on some policies
- Short-term rental use, unless the policy specifically covers it. See the Airbnb vs long-term calculator.
- Flood, unless included or added
What drives the cost
Premiums depend on location (bushfire, flood and cyclone exposure are big factors), building type and age, the sum insured, the excess you choose, and the extras you add. Northern Australia and flood-prone areas can cost much more. Our calculator examples use $1,500 a year for a house and $600 for a unit, but your quotes may differ a lot.
How insurance affects yield
Insurance comes straight off net yield. On a $650,000 house, every $500 of premium is about 0.08 points of net yield. In high-risk areas, insurance can be the difference between a property that looks high-yield on paper and one that is not. It is one reason to treat very high yields with care. See rental yield myths.
Tips
- Compare at every renewal, checking limits and excesses, not just price.
- Confirm loss of rent covers tenant default if that matters to you, and for how many weeks.
- Make sure your property manager’s inspection reports meet the insurer’s conditions.
- For units, check what the strata policy covers before buying extra building cover. See strata fees.
Put your premium in the numbers
Add your insurance quote to see your real net yield.
Frequently asked questions
Is landlord insurance compulsory in Australia?
It is not legally required, but lenders require building cover on mortgaged houses, and most investors take landlord cover for loss of rent and tenant damage.
Is landlord insurance tax deductible?
Premiums for a rental property are generally deductible against rental income. Check with your accountant.
Do I need landlord insurance for a unit?
The building is usually insured by the strata, but you still need cover for your contents, loss of rent and liability.
See what this property would yield
Enter the price, rent and costs to get gross yield, net yield and weekly cash flow.
General information only. This calculator and content do not consider your personal circumstances and are not financial, tax or legal advice. Speak to a licensed professional before making investment decisions.
