A Landlord’s Guide to Premiums in Insurance


If you’re a landlord or property investor in Australia, it’s important to understand how insurance premiums are calculated and what factors can affect them. 

This knowledge can empower you to make informed decisions, budget effectively, and save money in the long run. Knowing the factors influencing insurance premiums also means protecting your investment and ensuring adequate coverage in case of unforeseen events.

What are Insurance Premiums?

Let’s start with the basics. An insurance premium is the amount you pay to an insurance company in exchange for coverage. It’s the price you pay for the peace of mind that comes with knowing your property is protected against potential risks and liabilities.

Insurance premiums are calculated based on various factors, including:

  • the level of risk associated with your property
  • the coverage you require, 
  • and the deductibles you’re willing to pay. 

Essentially, the higher the risk, the higher the premium. Insurers use complex algorithms and actuarial data to determine the appropriate premium for each policyholder.

Understanding how premiums are calculated can help you make more informed decisions about your insurance coverage and budget accordingly. After all, insurance is an essential expense for any responsible landlord or property investor.

Factors Affecting Life Insurance Policies Premiums for Landlords and Property Investors

Now, let’s dive into the specific factors that can influence your insurance premiums as a landlord or property investor in Australia.

For instance, a property located in a flood-prone area may have a higher premium due to the increased risk of water damage

Similarly, a commercial property with a high crime rate in its vicinity may also attract a higher premium. This variability is crucial for understanding how insurance prices can be affected by a range of factors, including the geographical area and the characteristics of the insured property.

Location, Location, Location

The location of your property plays a significant role in determining your insurance premium. Properties in areas prone to natural disasters, such as floods, bushfires, or areas with higher crime rates will typically have higher premiums due to the increased risk. 

The Insurance Council of Australia plays a crucial role in explaining the reasons behind escalating premiums, particularly in locations susceptible to natural disasters, highlighting the impact of extreme weather events and climate change on insurance costs.

Age and Condition of the Building

Insurers may consider older buildings or those in need of repairs to be considered higher risk, resulting in higher premiums. On the other hand, well-maintained and newer properties may qualify for lower premiums.

Type of Property

The type of property you own can also impact your insurance premium. For example, residential properties may have different risk profiles compared to commercial properties, and insurers will adjust premiums accordingly.

Occupancy Rate

If you own a rental property, the occupancy rate can influence your premium. Properties with higher occupancy rates may be considered lower risk, as there is a consistent stream of income to cover expenses, including insurance premiums.

Claims History

Your claims history can significantly impact your insurance premium. If you’ve filed multiple claims in the past, insurers may view you as a higher risk and adjust your premium accordingly.

Additional Coverages

Depending on your specific needs, you may require additional coverage beyond the standard landlord insurance policy. These additional coverages, such as liability protection or natural disaster coverage, will typically increase your premium. 

When considering these options, it is important to evaluate the insurance coverage in terms of ongoing costs and how premiums may adjust after any initial discount period.

Strategies to Manage Insurance Premiums in the Insurance Market

While some factors affecting your insurance premium may be out of your control, your role in managing and potentially reducing your costs is crucial. Your actions can make a significant difference in your insurance premiums.

  • Shop around and compare quotes from different insurers. Don’t just renew your policy without exploring other options. At Duo Insurance, we’ll give you a competitive and tailored quote on the best policy to suit your needs.
  • Increase your deductible. A higher deductible means you’ll pay more out-of-pocket if you need to make a claim, but it can also lower your premium. Weigh the risks and potential savings carefully.
  • Implement risk mitigation measures, such as installing security systems, which can deter potential burglars and reduce the risk of theft, or regularly maintaining your property, which can prevent issues like water leaks or electrical faults. These efforts can demonstrate to insurers that you’re proactive about reducing risks, which may result in lower premiums.
  • Review your coverage regularly and adjust as needed. Your insurance needs may change over time, so it’s essential to ensure you’re not paying for coverage you don’t need or missing out on crucial protection. Additionally, review the ‘sum insured’ amounts, which is the maximum amount your insurer will pay in the event of a claim, to ensure your premiums are aligned with the property’s value, considering any changes that may affect coverage needs.

Tips for Premiums in Insurance for Landlords 

As a landlord or property investor, there are a few additional considerations to keep in mind when it comes to insurance premiums:

  1. Accurate Property Valuations: Ensure your property is accurately valued to avoid being over-insured or under-insured, which can impact your premium.
  2. Landlord Insurance: Consider landlord insurance specifically designed for rental properties. This type of coverage can protect you against risks unique to being a landlord, such as tenant-related damages or loss of rental income.
  3. Legal Requirements and Liabilities: Understand your legal obligations and potential liabilities as a landlord or property investor. Adequate insurance coverage can protect you from costly legal disputes or claims.
  4. Tenant Communication: Communicate clearly with your tenants about their insurance and property maintenance responsibilities. This can help mitigate risks and lower your premiums.

Key Takeaways

  • Understanding how insurance premiums are calculated can empower landlords and property investors to make informed decisions and protect their investments.
  • Insurance premiums are calculated based on various factors, including the risk associated with your property, the coverage you require, and the deductibles you’re willing to pay.
  • Factors such as property location, age and condition of the building, type of property, occupancy rate, claims history and additional coverages can influence insurance premiums.
  • Landlords and property investors can manage and potentially reduce their insurance premiums by shopping around, increasing their deductible, implementing risk mitigation measures, and regularly reviewing their coverage and adjusting as needed.

Ready to get insured?

Our friendly staff are ready to answer any questions.