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Four questions to ask when choosing a landlord insurance policy
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Four questions to ask when choosing a landlord insurance policy

06 Apr 2022 4 mins read

When it comes to landlord insurance, there are different policies for different types of properties and letting scenarios. Choosing the right policy is all about asking the right questions.

Landlord insurance covers a range of common risks rental property owners face when leasing property. As not every type of property or letting scenario presents the same risks, there are different types of policies available. So, whether you’re insuring your rental for the first time or renewing an existing policy, it is important to make sure the cover you choose meets your needs.

Ask yourself these four questions to help determine which policy is right for you.

What type of property is my rental?

By type of property, we’re talking about detached houses and other dwelling types like units, apartments, flats, villas and townhouses, which are usually within strata developments.

  • If your rental is a detached or stand-alone house, you are likely to need cover for the building and contents. If the building is insured separately, you may consider just contents cover.
  • Meanwhile, if your rental is an apartment, villa, flat, unit, serviced apartment or other non-detached property, you may seek cover for your contents. The building structure and common areas are usually covered by a separate strata insurance policy held by the body corporate/owners’ corporation (you should check what policy your body corporate has and what it covers).

You should also consider what type of contents cover is needed. This will depend on whether the property is unfurnished (you only require contents cover for the items you own at the premises, not tenants’ possessions) or fully-furnished (which may require loose contents cover). 

What type of lease is it?

As different rental scenarios have different risks, it is wise to choose a policy that’s right for how you rent it.

There are policies designed for fixed-term and periodic (month-to-month) leases. These can cover building and contents, or contents only.

When you rent out your property for less than six months at a time, for example as a holiday home or Airbnb-style accommodation, you should consider a short-term policy.

Meanwhile, in situations where you don’t want to insure against tenant-related risks, for example you’re renting to a family member, friends or a reliable long-term tenant, then a policy that protects against insured events like fire, storm and flood, but not tenant issues like accidental damage or unpaid rent, may suit.

If the property is used as a lodging/boarding house, for student accommodation, as a share house, or there are multiple lease agreements, the tenant operates a business from the premises or there’s a sub-letting arrangement in place – then landlord insurance is unlikely to be suitable and alternative cover will need to be sought.

TIP: Check the set limits on the amount payable for rental losses (ours is typically $1,500 per week but you can increase it for an additional cost). If the property is leased for more than the maximum payout amount, you’ll need to discuss your options.

What risks do I need to protect against?

Did you know? More than half of the claims lodged at EBM RentCover each year are for losses from tenant-related issues. This is why most landlords may need cover for tenant-related risks like damage (accidental, intentional, malicious or pet), theft by tenant and loss of rent (rent default, denial of access, loss of rent due to repairs, death of a tenant). What’s covered, for how long and under what circumstances, varies between insurers, so be sure to check the product disclosure statement (PDS). 

Legal liability is another important feature; however it is often overlooked (despite it being one of the most expensive costs a property owner can face). Legal liability cover protects you when you are found legally liable for an incident, including tenant injury. Check the policy also covers reasonable legal costs and expenses.

In addition, regardless of the property type and lease arrangement, it is encouraged that your policy covers perils like fire, storm, flood and impact damage. Weather events can devastate a property, so it is important to be covered for these risks.

What are my plans for the property over the period of insurance?

Leaving the property vacant or renovating? These are times when your rental property may not be covered by insurance, so have a chat about cover options.

It may seem obvious, but it’s important to remember that landlord insurance is designed for rental properties. If the property isn’t being rented, for example if you’re planning on moving in yourself or letting family/friends live there rent-free or you’re choosing to leave it unoccupied, then you need different insurance (e.g. home and contents).

TIP: Keep your insurer in the loop when it comes to material changes at your rental (e.g. vacancy, renovation, changed leasing arrangement) so you can get the best advice about your insurance options.

Now, armed with the answers to these questions, you’ll be in a good position to look for the insurance cover you need. Got questions? Contact a member of our Expert Care team on 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions. 

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