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Landlord insurance covers an investment property against the risks that come with tenants: loss of rental income, malicious or accidental damage by tenants, and your legal liability as the owner. It is sold either as a combined building and landlord policy for a house, or as landlord contents and rental cover for a strata unit where the owners corporation insures the building.
A standard home and contents policy is written for an owner who lives in the home. NRMA's home PDS, for example, does not cover deliberate or malicious damage by anyone who normally lives in the home, including a tenant, which is exactly the risk a landlord most needs covered. That is the main reason landlords need a policy designed for the purpose rather than keeping the one they had when they lived there.
By Better Rate Mate Editorial Team · Last reviewed
Policies differ in what is standard and what is optional, but most are built from the same blocks. The cheaper end of the market strips out rent and tenant cover, so compare the blocks rather than the headline premium.
| Cover | What it pays for | Common limits and conditions |
|---|---|---|
| Building | Repair or rebuild of the structure after listed events | Only for houses and titles you insure yourself; not needed for most strata units |
| Landlord contents | Items you supply: carpets, blinds, appliances, furniture in a furnished rental | Sum insured you nominate; fixtures may already sit under a strata policy |
| Loss of rent after an insured event | Rent while the property cannot be lived in because of fire, storm or other listed damage | Capped by weeks or a dollar amount |
| Rent default | Rent a tenant stops paying or leaves owing | Capped by weeks or amount; check how the bond is treated and what tenancy steps are required |
| Tenant damage | Malicious, intentional or accidental damage by tenants or their guests | Separate excesses often apply; wear and tear always excluded |
| Legal liability | Your liability as owner for injury or property damage at the rental | Set in the PDS; check it matches your home policy's limit |
If the rental is a freestanding house, you insure the building and any contents you supply, plus the landlord-specific covers. A combined landlord building policy handles all of it.
If the rental is a unit in a strata scheme, the owners corporation's policy insures the building and common property, so you do not buy building cover. You still need landlord contents (carpets, blinds, appliances and anything else you own inside the lot, where the strata policy does not cover them), loss of rent and tenant damage cover, and liability for your lot. Read the strata policy first, because the boundary between what it covers and what you must cover varies by scheme and by state.
Rent default cover is the benefit landlords most often assume they have and then discover is limited. Before relying on it, check four things in the PDS: whether the bond is applied before the policy pays, how many weeks of rent it pays at most, what tenancy steps it requires (typically a written lease, tenant checks and breach notices issued under your state's residential tenancies law), and whether the property must be professionally managed.
Bond limits and the tenancy process are set by state law, so the checks an insurer expects differ between states. Your state's residential tenancies authority publishes the current rules.
Exclusions are where cheaper and dearer landlord policies differ most. These are the ones to check in every PDS.
For a property that is rented out or genuinely available for rent, the ATO treats insurance premiums for the rental as a deductible rental expense, alongside items like council rates and property management fees. If only part of the property is rented, or it is rented for only part of the year, the deduction is apportioned. The ATO's rental properties guide has the current rules and examples.
For most investors the value is in the covers a home policy does not give you: tenant damage, rent default and liability as a landlord. A single tenancy that ends with serious damage and weeks of unpaid rent beyond the bond can cost more than many years of premiums. Whether that trade suits you depends on your cash buffer and how the property is managed.
Wear and tear, gradual damage, loss of rent when you simply cannot find a tenant, damage from pets you did not agree to, and short-term holiday letting, in most policies. Strata unit owners are also not covered for anything the strata policy is responsible for.
You do not need building cover, because the owners corporation insures the building. You still need cover for your own fixtures and contents inside the lot, loss of rent and tenant damage, which is what a landlord contents or strata landlord policy provides.
Usually not. Most home policies assume you live in the home and limit or exclude cover once it is tenanted. Tell your insurer before the tenancy starts and switch to a policy written for rental properties.
Premiums for a property that is rented or genuinely available for rent are generally deductible as a rental expense. See the ATO's rental properties guidance for apportionment rules.
