Managing landlord insurance costs is a critical but often overlooked aspect of property investment. With premiums being a significant expense, many landlords simply accept the quoted costs without exploring ways to optimise them.
But, with the right strategies, you can secure adequate coverage for your rental property while controlling costs.
So, in this guide, we’ll share tips from experienced investors on reducing your landlord insurance expenses without compromising protection.
1. Review Your Insurance Policy Annually
Reviewing your landlord insurance policy annually is a great way to ensure you have adequate coverage at a competitive price. As your circumstances change, your policy needs to evolve as well.
So, each year, take time to thoroughly re-evaluate your sum insured, coverage limits, exclusions, and add-ons.
- Have property values increased significantly due to market shifts or renovations? That could impact rebuilding costs and the amount of coverage you need.
- Has the local area seen an uptick in crime that could raise your risks?
- Do you now qualify for any discounts based on loyalty or claim history?
Additionally, updating your coverage annually also helps ensure you are insured. Underinsurance leaves you vulnerable in the case of a major insured event. Overinsurance leads to overpaying for premiums year after year.
You should also scrutinise your policy for unnecessary extras that may be padding your premiums. For example, loss of rent coverage that extends beyond the typical timeframe needed to make repairs after the insured events.
An annual review takes little time but can yield significant savings while ensuring your biggest asset is properly protected. Mark it on your calendar each year!
2. Bundle Your Landlord Insurance Policies
If you own multiple rental properties, bundling them together on one landlord insurance policy with the same insurer can lead to attractive multi-policy discounts.
Most insurers offer bundled policies for landlords, which essentially group all your properties under one master policy. This allows you to take advantage of tiered pricing, which reduces rates for each additional property.
Discounts may range from 5–15%, providing substantial savings, especially for landlords with several properties.
Beyond the discount, bundled policies also provide the convenience of working with one agent or company for all your needs. This streamlines the administration process. You also gain increased leverage to negotiate pricing by consolidating all your business under one insurer.
Just be sure to compare the bundled pricing side-by-side with individual policies. Bundling only sometimes guarantees the lowest cost, so run the numbers carefully.
3. Increase Your Deductible
One simple way to reduce your premiums is to opt for a higher deductible, also called an excess in Australia. This is the amount you pay out-of-pocket before insurance coverage kicks in.
Most standard policies come with a relatively low deductible, like $500. By increasing this to $1,000 or even $2,500, you can potentially decrease your premiums by 10–25%.
Just be sure you have adequate savings to cover the higher deductible amount if a claim is needed.
When weighing a higher deductible, consider your risk tolerance and the value of your property. If you own a high-end rental where major claims are more likely, a low deductible makes sense for better protection.
But for many landlords, boosting the deductible can be an effective way to cut costs while still safeguarding your investment.
4. Enhance Security
Adding security enhancements like alarm systems, secure locks, sensor lights, and fencing can help reduce your premiums by lowering risks.
Many Australian insurers provide security discounts for landlords beyond the minimum requirements. For example, installing a monitored alarm system, reinforcing door frames, adding deadlocks to all external doors, and mounting sensor lighting.
The more robust the security, the higher the potential savings. But even smaller improvements like fencing or lighting can make you eligible for a discount. It varies by insurer, so discuss options with your provider.
5. Maintain Your Investment Property
Keeping your rental property well-maintained is key to controlling costs. Insurers pay close attention to the upkeep and condition of a property when assessing risk levels and setting premiums.
Properties in disrepair or with deferred maintenance signal higher risks that can inflate your policy costs. Issues like broken windows, faulty electrical, leaky roofs, overgrown vegetation, and other problems may raise concerns.
Whereas well-kept properties with few claims and documented care represent less risk, allowing insurers to offer lower premiums.
So, stay on top of regular maintenance and repairs. Conduct thorough property inspections at least annually. Retain documentation like inspection reports and receipts for maintenance work to share with your insurer when reviewing your policy.
6. Shop Around
Don’t just automatically renew your policy; take time each year to shop around and compare quotes from different insurers. Rates can vary significantly for similar coverage.
Get proposals from at least 3–5 major national companies, along with a local insurance provider. Compare premiums, coverage inclusions, exclusions, excesses, and service. Online comparison sites like Canstar and Finder can provide quotes quickly but also connect directly with companies by phone or their website.
Spending time shopping around annually almost always results in savings compared to policy loyalty. We also recommend getting in touch Duo Insurance who can give you a tailored and competitive quote for your needs – this will ensure you get the most bang for your buck, and the coverage you require.
7. Enquire About Discounts
Many insurers offer special discounts that can help shave costs, but you have to ask to receive them.
Discounts may be available for things like multi-policy bundling, loyalty renewals, good claims history, security systems, and more, but companies won’t necessarily highlight these unless inquired about.
So, when reviewing your policy, have a list of questions ready to discuss potential ways to reduce your premiums. Ask if they offer discounts for each item and what criteria is required to qualify.
Taking the initiative to understand available discounts can uncover potential savings each year.
Don’t be shy – ask away!
8. Work With a Broker
For individualised service and policy expertise, consider partnering with an insurance broker. They act as your advocate and handle the legwork of comparing multiple insurers on your behalf.
Brokers also have established relationships with many companies and can negotiate competitive pricing by leveraging your full history and bundling options. They help identify cost-saving strategies specific to your situation.
While most don’t charge fees, brokers are paid commissions by insurers, so weigh that incentive when making your decision. But for many landlords, the expertise and convenience can justify the costs.
- Review your policy annually to right-size coverage and remove unnecessary extras. This prevents over- or underinsurance.
- Bundle multiple rental properties with one insurer to take advantage of attractive multi-policy discounts.
- Consider increasing your deductible or excess to lower premiums if you can afford the higher out-of-pocket amount.
- Add security enhancements to qualify for building insurance discounts. Alarms, lighting, fencing all help.
- Maintain your rental property well. Documented good condition means lower risks and premiums.
- Shop around annually for the best rates. Don’t just renew the same policy.
- Ask about available discounts—multi-policy, loyalty rewards, security systems, etc.
- Use an insurance broker for individualised service when comparing policies.
Protect your investment while optimising costs with these landlord insurance tips. Get a quick quote from Duo Insurance to evaluate your options.
What is a Liability Insurance Clause?
A liability insurance clause protects you against financial consequences if allegations are made against you by tenants. This could include legal liability expenses and compensation if you’re found liable for investment property damage leading to tenant injury.
Does Landlord Insurance Cover Short-Term Rentals Like Airbnb?
Some insurers offer specific landlord insurance for short-term rentals. However, conditions generally apply, and coverage is typically provided only for the nights the property is rented.
Are Landlord Insurance Premiums Tax Deductible?
Yes, generally, insurance premiums on rental properties can be claimed as a deductible expense to reduce the tax you pay on your rental income.
What Does the Landlord Insurance Cost Cover?
Landlord insurance covers:
- Loss of rent due to tenant default or damage
- Malicious damage by tenants
- Theft by tenants
- Legal expenses for evicting tenants
- Public liability claims by tenants or visitors
Is Landlord Insurance Compulsory?
While there’s no legal obligation for landlords to have insurance in Australia, it’s often considered best practice. Most mortgage lenders also require landlord insurance as a condition of the home loan.