As a landlord in Australia, you have a legal duty of care to provide a safe living environment for your tenants. However, even with the best maintenance and safety measures, accidents can still happen on your rental property.
Without proper public liability coverage, landlords could be responsible for hefty legal and compensation costs. That’s where public liability insurance comes in. It protects property owners financially if someone is injured or their property is damaged, and they are found liable.
What is Public Liability Insurance for Landlords?
Public liability insurance for landlords provides coverage if a tenant or visitor suffers an injury or property damage due to an incident on their rental property, and they are held legally responsible. Policies typically provide $5-20 million in coverage.
Examples of incidents that may be covered include:
- A tenant tripping on a broken step and breaking their arm
- A visitor’s car being damaged by a falling tree branch on the property
- A tenant’s belongings being destroyed by a ceiling collapse
When Do Landlords Need Public Liability Insurance?
Landlords are legally responsible for ensuring their rental property is safe and well-maintained. At the same time, tenants have the right to a property that is fit to live in, reasonably clean, and in good repair.
If property owners fail to meet these obligations and someone is injured, they could be found negligent and liable for damages.
Some key reasons why landlords need public liability insurance include the following:
- Accidents can happen even in well-maintained properties
- Legal and compensation costs can be financially devastating
- Tenants can sue landlords for injuries and property damage
While there’s no government legislation or regulation that mandates landlords to have public liability insurance, it may be required in certain situations, such as when a landlord is renting out their property through a real estate agency or as part of a rental agreement.
Home and Contents Insurance is Not Enough
It’s crucial to understand that a standard home and contents insurance policy does not provide liability coverage for landlords. These policies are designed for owner-occupiers, not rental properties.
Property owners will not be covered if an incident occurs on their rental property, and they only have home and contents insurance.
As a landlord, you need a specialised landlord insurance policy that includes public liability coverage. Don’t make the mistake of thinking your existing home insurance is sufficient—it could result in a significant financial loss in the event of a claim.
The Risks of Not Having the Right Insurance
Having proper insurance coverage is crucial for landlords, as it could spare them from facing a costly legal battle and potentially massive compensation payout.
For example, if property owners decide to lease out a spare room in their house to earn some extra income, there’s a high possibility that they only have a home and contents insurance policy. A common misconception that owners assume is that their policy automatically covers public liability.
However, if they fail to notify their insurer that they have a paying tenant who gets injured after having an accident—such as slipping on a loose floorboard—that they were unable to repair prior to the move-in date, the landlord may face serious consequences.
The mishap can result in the tenant suing the property owner for negligence. Since they could not disclose their rental situation to the insurer and have the incorrect insurance, their home and contents policy won’t cover the damage.
This scenario illustrates why having the right insurance as a landlord is vital. Even if you only plan to rent out a room in your own home, you must notify your insurer and get the appropriate coverage. A small premium now can save you from financial ruin later.
What Does Landlord Public Liability Insurance Cover?
Landlord public liability insurance typically covers the following:
| Coverage | Details |
| Injury to tenants or visitors | Medical costs, pain and suffering |
| Property damage | Repair or replacement costs for damaged belongings |
| Legal defense costs | Lawyer fees and court costs if the property owner is sued |
| Compensation payments | Settlements or judgments if the landlord is found liable |
Policies generally do not cover intentional acts, criminal activity, or damage to your own property. To safeguard your investments, always read the fine print and exclusions before committing to a policy.
How to Get Public Liability Insurance as a Landlord
Many landlord insurance policies include public liability coverage, along with protection for building damage, contents, rent default and more. This is often the most convenient and cost-effective option. You can also purchase stand-alone public liability policies.
Premiums will vary based on factors such as:
- The amount of coverage
- Type and location of rental property
- Claims history
Key Takeaways
- Public liability insurance is essential for landlords to protect against injury and damage claims from tenants and visitors.
- Landlords have a legal duty of care to provide safe rental properties.
- Home and contents insurance does not cover landlords – property owners need a specific landlord policy.
- Not having the right insurance can lead to financial disaster if you’re sued.
- Policies typically cover injury, property damage, legal costs and compensation payments.
- Landlord insurance bundles that include public liability are often the best option.
- Every landlord’s situation is different, so talk to an insurance broker about your specific needs.
- Having an insurance broker from Duo Insurance can help you find the right coverage at the best price.