Home Insurance vs Landlord Insurance: What Property Owners Need to Know

Some homeowners have home and contents insurance, then keep it in place when they move out and lease to tenants. Then something happens and their claim is knocked back, because the policy they have doesn’t cover them correctly. 

The reality is your landlord insurance needs to be specific to your needs.

Which insurance do you need as a rental property owner?

Home and contents insurance is built for owner-occupiers. It covers the building and your belongings against events such as fire, storms, water damage, theft and certain liability claims. 

What it generally doesn’t cover are the risks that come with having tenants in the property, things like loss of rent, tenant damage or rent default. Because renting is treated as a commercial activity, many home and contents policies specifically exclude tenanted properties, which means a claim could be declined and the cost left with you when something goes wrong.

Choose purpose-made insurance

Landlord insurance is designed to protect the owners of rental properties. 

Alongside cover for the building and contents, it extends to the income your property produces and the issues that can arise with tenants. 

Specialist policies can cover things you might not expect, including damage caused by fixtures and fittings being removed at the end of a tenancy, legal costs for tribunal disputes, the cost of changing locks after an eviction, costs tied to a tax audit, and clean-up if illegal activity occurs at the property.

There are also policies that protect you if something happens to the property and the tenants suddenly can’t live in it, or if your tenants suddenly stop paying the rent. 

Strata, family rentals and other special cases

If your investment is part of a strata scheme, the strata’s insurance policy generally only covers the building structure and common areas. It won’t extend to your unit’s contents, loss of rent or tenant-related liability inside your property, so a landlord insurance policy is still worth having. 

There are also situations where full tenant cover may not be necessary, such as renting to a family member or close friend. In this case, some specialist insurers offer householder-style policies for these arrangements, providing protection for events such as fire, storm and water damage, as well as loss of rent, without the tenant-specific elements.

As your property manager, we can help you understand which type of cover suits your situation and make sure your policy reflects how the property is being let.