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Why is landlord insurance so important?

Published 31 January 2020

Buying an investment property is an exciting step, but it’s important to protect it with landlord insurance.

After purchasing an investment property, next steps include finding a good tenant and considering the levels of cover the property may need. Apartments and townhouses in a complex managed by strata may have some insurance for external areas, but it won’t cover damage to the interior damage by tenants or loss of rent.

Landlord insurance can cover you against unforeseen repair bills, possible loss of rent and even the cost of rebuilding the property if it’s damaged in a natural disaster. 

What is landlord insurance?

Like general home and contents insurance, landlord insurance can provide cover for:

  • Full building replacement protection against natural disasters, such as bushfires or cyclones.
  • Damage to the property resulting from impact. For example, if a tree falls on the building and causes a fire. 
  • Built-in air conditioners, light fittings, or garden sheds.
  • Contents including any furniture, carpets, floorboards, or electrical equipment supplied to tenants.
  • Blinds, outdoor plants and lawnmowers.
  • Combined cover for both buildings and contents.

In addition to home and contents protection, landlord insurance can offer cover for:

  • theft by tenants
  • accidental glass breakage
  • water damage
  • fire or explosion
  • damage from a power surge.

Does landlord insurance cover loss of rent?

Horror stories of tenants trashing a property that make it unliveable make the news. Thankfully, some landlord insurance policies will cover for loss of rent while the property is repaired so new tenants can move in.  Some will even cover up to 12 months, which can make a real difference to finances – and stress levels. Read through the product’s product disclosure statement (PDS) for specifics of the cover before taking out a policy.

Landlord insurance can also cover specific risks that owner-occupiers don’t have to worry about, such as damage caused by a tenant.

If faced with a problem tenant, landlord insurance could save thousands of dollars in repairs. Landlord cover can also help cover the costs of taking legal action against difficult tenants.

Even good tenants can cause accidents

Thankfully, most tenants want to do the right thing. But of course, accidents do happen. A harmless game of backyard cricket can end with a ball smashing through the kitchen window, a glass of red wine accidentally spilling causing damage to your carpet or furniture, a leaking washing machine could flood the ceiling of the apartment below resulting in huge repair and replacement bills.

That’s why it’s worth getting landlord insurance that includes accidental damage and liability cover. Check your policy’s PDS to ensure it covers things such as accidental glass breakage and water damage.

What doesn't landlord insurance cover?

Landlord insurance generally doesn’t cover the wear and tear to a property or costs for regular maintenance issues, such as a plumber fixing a leaking tap.

It doesn’t provide cover for any period your property is without a tenant, or for any repairs that a tenant may carry out themselves. Cover is also unlikely to extend to items such as trees, shrubs, or anything growing in the ground.

It’s important to have a tenancy agreement in place so the tenant fully understands what is and isn’t covered.

 

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This information is current as at date of publication and is subject to change.

The issuer of this information is ANZ. While ANZ has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. To the extent permitted by law, ANZ does not accept any responsibility or liability arising from your use of this information.

ANZ Landlord Insurance is issued by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239 545) (QBE). ANZ recommends that you read the ANZ Financial Services Guide (PDF 479kB) and ANZ Landlord Insurance Product Disclosure Statement and Policy Document (PDF 1.2MB) (available online or by calling 13 16 14) before deciding whether to acquire, or to continue to hold, this product.

Although Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 AFSL 234527 distributes these products, ANZ does not guarantee the issuers or their products.

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