Landlord Insurance Vs. Home Insurance


As a landlord, you know the importance of protecting your investment. But when it comes to insurance policies, it can be a minefield of confusion and jargon. 

We commonly get the question of what the difference is between landlord insurance and home insurance. In this article, we’ll explore each coverage type’s inclusions, uses and cost details. 

The Differences of Landlord Insurance vs Home Insurance

There are two types of insurance landlords can consider in Australia—landlord insurance and home insurance. Both offer property protection, but they aren’t the same thing. 

To set you off on the right foot, let’s break down these categories and dissect them in an easy-to-understand manner. 

Home Insurance

Firstly, we have home – or homeowner’s – insurance,  which many of you might already be familiar with. It’s designed primarily to cover the risk associated with living in the house. This could be anything from damage due to natural calamities, theft, or certain personal liability situations that may arise within the property. 

However, while this sounds great when living in your own house, as a landlord, it’s a different kettle of fish. 

Landlord Insurance

This is where landlord insurance steps in, tailored specifically with a rental property or investment property in mind. Think along the lines of tenant-related issues such as non-payment of rent, damage to property caused by tenants, and legal costs involved with tenant disputes. It essentially acts as a cushion against the unique problems landlords can face. 

Insurance TypeInclusionsUses
Landlord Insurance– Loss of rental income
– Damage by tenants or their guests
– Legal expenses related to tenant issues
– Coverage for the building and connected structures
– Cover unexpected financial losses connected with rental properties
– Protect against damages caused by tenants
– Ensure a stable income even when rent is unpaid or the property is undergoing repair
Home Insurance– Coverage for the building and any additional structures
– Personal property protection
– Liability coverage
– Additional living expenses if the home becomes uninhabitable
– Protect the homeowner’s investment in their property
– Cover personal belongings in the event of theft or damages
– Provide financial protection against accidents occurring on the property

Cost Considerations of Home vs. Landlord Insurance

When comparing landlord insurance policies to home and contents insurance from a financial standpoint, there’s usually a price difference. 

This is mainly due to the varying levels of coverage they offer. Landlord Insurance, as you might imagine, tends to be a bit more costly than a standard home insurance policy. This is because there are additional risks tied to renting out a property—risks that home insurance just isn’t designed to cover.

Bearing this in mind, as a landlord in Australia, you’ll need to evaluate your insurance options critically. Shouldering the additional cost of landlord insurance might initially seem like a financial burden, but imagine it as an investment. 

At Duo Insurance, we consider your circumstances to give you a tailored quote on landlord insurance covers available to you. You’ll get a transparent rundown of everything included in your coverage, as well as the costs and premiums involved—no hidden fees.

What’s the Right Insurance Policy For You?

According to the Insurance Council of Australia, an estimated 80% of Australian landlords and homeowners are underinsured. 

It’s important you don’t become a part of this statistic if you want to ensure your asset is well-protected. 

While it might be tempting to opt for the first policy that meets your budget, you should always do your homework and do thorough research to understand what’s included in every policy available to you. 

More importantly, remember that landlord insurance is specifically designed for rental properties. Once you have this in mind, you can take the next step of comparing plans but also insurance providers. At Duo Insurance, we take the hard work out of this process for you. 

What does landlord insurance cover that home insurance doesn’t?

Landlord insurance offers a wide range of coverage options that extend well beyond those found in a typical home insurance policy. These additions are designed to provide protection specifically tailored to the unique risks and responsibilities that come with being a landlord. Here’s what landlord insurance typically covers that home insurance doesn’t: 

Loss of rent: In case of a severe event such as a fire, that renders your rental property uninhabitable, landlord insurance can cover the lost income for a defined period.

Legal liability: Home insurance policies don’t usually cover tenant-related incidents. However, landlord insurance can cover you if a tenant or their guest gets injured on your property and you are found legally responsible.

Tenant damage: Landlord policies typically offer coverage for intentional damage or theft by tenants, which is not offered in most home insurance policies.

Landlord’s contents: If you rent your property fully or partially furnished, landlord insurance can cover the costs to repair or replace items such as appliances, furniture, and other contents belonging to you.

Rental default: Rental default cover is usually a component of landlord insurance and can protect you if your tenants leave without notice, are evicted, or stop paying rent.

While the specifics of what is covered can differ between insurers and individual policies, these are the standard inclusions that differentiate landlord insurance from ordinary home insurance. Always consider your property, tenants and potential risks when deciding what level of coverage is right for you.

What are the potential risks of not having landlord insurance in Australia?

The decision to operate as a landlord without an appropriate landlord insurance policy can potentially expose you to a number of significant financial and legal risks. Irrespective of how trustworthy or responsible your tenants may be, unforeseeable circumstances such as natural disasters, accidental damage, or even deliberate property damage can occur. These events may result in expensive repair or replacement costs. 

Beyond physical damage, there is the risk of potential loss of income due to unpaid rent. As a landlord, you rely on consistent rental income to cover any mortgage payments or associated costs with the property. In the event that the tenants default on their payments, landlord insurance can offer critical financial relief, covering the lost income while you seek to resolve the issue. 

Additionally, landlord insurance can help provide coverage for legal expenses, a contingency that is not to be overlooked. Tenancy disputes unfortunately can and do occur, and these can often result in costly legal proceedings. Without landlord insurance, these costs would fall entirely on you and could place you in a dangerous financial position.

Therefore, while landlord insurance might appear as an extra expense, the potential risks associated with not having it can be far more financially draining and stressful. As with any form of insurance, the investment in landlord insurance is about managing risk and providing peace of mind that you’re protected against the unpredictable.

Is landlord insurance compulsory for property owners in Australia?

Landlord insurance is not compulsory for property owners in Australia. However, it is highly recommended for landlords to consider landlord insurance to protect their investment and mitigate the risks associated with renting out a property. 

While home insurance may provide some coverage, it may not offer the specific protections needed for rental properties. This type of insurance can provide additional coverage tailored to the unique circumstances and challenges that landlords may face. 

Key Takeaways

  • Landlord and home insurance cater to different needs, with landlord insurance specifically designed to cover the risks associated with renting out a property.
  • The cost of home insurance and landlord insurance can vary significantly, largely due to the different protections they each provide. Landlord insurance often costs more due to its additional coverage.
  • The Australian insurance market is diverse, requiring you to carefully evaluate multiple factors when choosing your landlord insurance policy such as the value of the property, the potential risks, and the level of coverage you require.
  • Comprehensive landlord insurance should adequately cover property damage, legal liability and loss of rental income among other risks, providing peace of mind for Australian landlords.
  • The ideal insurance policy for you will depend on your specific circumstances – consider engaging with a professional insurance advisor for personalised advice.

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