Landlord Insurance

The Building Coverage section are often comprehensive, offering protection for the structure of your residential investment property up to the Sum Insured against a wide range of Defined Events. This includes expected perils like Fire, Storm, Flood (unless specifically excluded on your certificate), and Theft, explosion, and lightning. Additional benefits are also provided, such as cover for Emergency Service Damages and Tax Audit Fees. We often recommend an “Accidental Damage” level of coverage which is usually the most comprehensive, targeting any damage to the building which is accidental in nature.

What’s often interesting to find isn’t included is that cover for fences or gates, landscaping, trees, or paths could either be capped or excluded, among other items. This is why you must read your policy documents and PDS to determine what is covered and what is not. Furthermore, cover may not extend to damage caused by erosion, subsidence, landslip, or landside, unless directly caused by and occurring within 72 hours of an insured event like a Storm. There is also a specific exclusion for damage arising from your failure to maintain the property in a good state of repair, such as from blocked drains or roof gutters overflowing due to debris. This is usually the most frequent issue that occurs during claims. A roof leak from a storm causes damage, and the insurer will often say the roof leak was due to poor maintenance, and not caused by the storm. Regular, documented maintenance of your property is the best asset to have on hand for these situations.

Contents Coverage insures property belonging to the property owner, covering items like domestic furniture, moveable carpets, floating timber floors, and household goods. The policy provides coverage for similar Defined Events as the building, including Fire, Theft, and Storm up to the Contents Sum Insured. What is often confusing or excluded are the specific limitations on high-value and personal items: Personal Effects (like spectacles, sporting equipment, handbags) are often capped, and there is an explicit exclusion for items like furs, jewellery, gold/silver articles, and works of art unless otherwise agreed to.

The Loss of Rent section is a crucial component for investors, designed to replace the rental income stream that stops when the property becomes Uninhabitable due to an insured event. This section is activated when the property sustains physical loss or damage from a Defined Event (like fire, storm, or flood) and is rendered unfit to live in for a period of time. Other triggers include being untenantable due to the death of a Tenant or a Tenant refusing to vacate after the documented booking ends. The insurer calculates the lost rent based on the actual amount lost, referring to returned or unpaid rent from bookings, rental agreements, and historical rental records. So, it is crucial you have a good record keeping system and can present these documents when a claim occurs. However, an important note, these sections often include an underinsurance clause: if you have insured for less rent compared to the total annual rent you actually receive, the claim payment will be proportionately reduced (not good.) Some clients may do this to save on premium now, but lose out big when going to make a claim.

Legal Liability is a vital cover for any investment property owner, protecting you against legal claims where you may become legally responsible for death, bodily injury, illness, or physical damage to someone else’s property occurring at your property. This cover is essential because the activity of short-term letting is often viewed as a commercial activity, which may invalidate the liability cover on a standard Home and Contents policy. Landlord policies often provide a maximum limit of up to $20 million for this coverage. Claims are covered only when arising from your actions or inactions as the property owner.. Crucially, the policy excludes liability arising from any business or occupation carried on by you other than that of landlord, reinforcing its specialised nature for rental investments.