In the world of property investment, landlord insurance for strata property is a bit like a safety net for homeowners. It offers a buffer against potential damage caused by both natural disasters and human factors.
It is particularly beneficial for strata property owners who are renting out their unit, apartment or flat to tenants.
But it’s important to understand that there are differing policies, especially when it comes to examining standard landlord insurance policies and those designed specifically for strata properties.
Landlord Insurance vs Landlord Strata Insurance
Landlord insurance and strata insurance are not the same in Australia, and both have their own set of coverage options, inclusions and exclusions:
Standard Landlord Insurance
- Covers loss or damage to the building and contents of a rental property that is a stand-alone house or building not part of a strata or body corporate.
- Typically, it covers events like storms, floods, fire, theft, and malicious damage by tenants.
- May offer additional coverage like loss of rent, tenant default, etc.
Landlord Strata Insurance
- Specifically designed for rental properties that are part of a strata title or body corporate, like apartments, units, townhouses, etc.
- Covers contents inside the individual apartment/unit that the landlord owns.
- Covers loss or damage to landlord’s contents from events like storms, floods, fire, and theft.
- Also covers loss of rent if the unit is unfit for occupancy.
- Does NOT cover the building structure – this is insured under the strata/body corporate’s building insurance policy.
So, in short, landlord strata insurance specifically covers contents for rental properties that are part of a strata or body corporate, while standard landlord insurance covers standalone buildings. They protect different property types and have some differing covers.
Strata Already Covered? You Still Need Landlord Insurance
Even if your building is covered by strata insurance, it is still crucial to have landlord insurance. The reason is that residential strata insurance only provides general insurance coverage for the building, shared property and shared contents.
The protection offered by the strata building policy ends when you cross the threshold of your individual property. Landlord insurance picks up where strata insurance leaves off, providing protection for tenant-related loss or damage inside your property.
Landlord Insurance for Strata: A Real-Life Instance
Let’s consider an example.
Emma owns an apartment in a strata development, which she rents out to Gail. One weekend, when Gail was away, a pipe under the sink ruptured. By the time Gail returns, the carpets are drenched and permanently water-damaged, and the floorboards underneath have bloated and warped under the water load.
Emma had to replace the carpets completely; the flooring took ten days to dry out before the new carpets could be installed. Emma had to provide alternative accommodation for Gail during this period. Thankfully, Emma’s landlord insurance policy covered the damage to the carpets and paid for the replacement.
Since the floors underneath are part of the strata building, they were excluded by the landlord policy. However, her strata insurance stepped in and covered the difference. This incident clearly demonstrates the importance of landlord insurance in protecting your investment property and safeguarding against potential losses.
Looking Into Strata Insurance for Landlords
Residential strata insurance covers the common property of a strata title property. This includes:
- shared indoor areas such as lobbies and hallways
- shared outdoor areas like driveways and gardens
- shared mechanics and utilities
- the fixed parts of your unit, including floors and windows.
It can also cover impact damage, resultant water damage, accidental damage, malicious damage, fire damage from an electrical fault, and storm damage. Strata insurance also includes public liability insurance for the common areas.
To help you break down and compare which policy you need for your needs as a landlord, here is a helpful set of scenarios and the appropriate coverage required:
|Damage to the rental property
|✔ Covers damages caused to your property, including fire, vandalism, or natural disasters.
|✘ Does not cover structural damage to the entire building.
|Theft or vandalism by tenants or their guests
|✔ Provides coverage for theft or vandalism perpetrated by your tenants or their visitors.
|✘ Does not cover damage caused by individual unit occupants.
|Rental income loss due to property damage
|✔ Offers coverage for lost rental income resulting from property damage.
|✘ Does not provide coverage for lost rental income for the entire building.
|Liability for tenant injuries
|✔ Covers your legal liability if a tenant is injured on your property and sues you.
|✘ Does not cover liability for common areas or personal injury to other unit owners.
|Personal property in the rental unit
|✘ Does not cover the personal belongings of your tenants.
|✘ Does not cover personal property in individual units.
|Common areas and building structure damage
|✘ Does not cover damage to common areas, shared facilities, or the building’s structure.
|✔ Provides coverage for damage to common areas and the entire building structure.
|Strata fees and assessments
|✘ Does not cover strata fees or special assessments levied by the homeowners’ association.
|✔ Covers strata fees and special assessments for shared expenses.
|Liability for accidents in common areas
|✘ Does not cover liability for accidents or injuries that occur in common areas.
|✔ Covers liability for accidents in common areas, such as the lobby or parking lot.
- Depending on the policy, landlord insurance protects strata property owners who are renting out their unit/apartment/flat to tenants.
- It covers accidental loss or damage to contents from events like fire, floods, storms etc. (e.g. carpets, appliances)
- It provides coverage for malicious damage to property/contents caused by tenants or their guests
- It covers loss of rental income if the property is unfit for occupation (e.g. due to damage)
- It provides liability protection if someone is injured on the property
- It covers legal expenses incurred while pursuing a tenant for unpaid rent or eviction
- Strata insurance, however, only covers common property, landlord insurance picks up inside the individual property
- Having both landlord and strata insurance provides comprehensive protection for strata property investors
Looking into building insurance or landlord policies? Get in touch to see how we can help you get the best coverage for your needs.