The answer to that is yes you do need a special policy for your rental. Landlords Insurance is designed specifically to protect property owners for their personal liability as property owners, as well as physical damage or loss to their investment property.

A home and contents policy only allows for the Insured person and their family to occupy the premises as their main or secondary residence (like a holiday home, for example), whereas a  Landlords Insurance is taking into account the risks associated with a tenant occupying the premises rather than the Insured person themselves.

If you think about it from the insurers perspective for a moment, the risk is far greater to the insurer (indeed yourself as the property owner!) in a party that doesn’t own the property, occupying it.

The Basics

A Landlords Insurance will cover the building itself, and any fixtures or fittings, including any contents if the property is furnished, for property damage as a result of certain insurable perils like fire, storm, burglary, impact, malicious and/or deliberate damage etc. Most policies on the market will include accidental damage cover either as standard or as an optional extra also.

Tenant damage is included however there are limits to what the cover will pay for. For example, poor hygiene and housekeeping are usually excluded under Landlords Insurances. Always refer to your Product Disclosure Statement (PDS) to find out the what’s and what not’s of the policy.

It will also cover you for loss of rent in the event an insured peril causes damage to the property, and your tenant is unable to inhabit the property and pay their rent. Like a kitchen fire for example, where the tenant has to move out and it takes 8 months to repair and you can re-let. The loss of rent cover should kick in and pay the rent for this period.

Your personal liability as a property owner is also a standard cover and is needed to protect you if any injury is caused to a third party as a result of any negligence in maintaining the property.

Optional Covers for things like Rent Default (where the tenant stops paying rent) are often a good idea to consider however you need to be aware of additional excesses that may apply for this cover.

Similarly to home and contents insurance, there are lots of options on the direct market, and all insurers and their policies are different.

So how do you make sure you’re getting the right cover? Work with a broker, of course! A good broker can navigate the different policies on the market, finding the best option for your circumstances, making sure you’re aware of coverage and managing your claims on your behalf.