Landlord Insurance: Is It Needed?

Landlord insurance is one of the most common questions we’re asked by new investors, and one of the most misunderstood. Here’s the plain-English version.

What it typically covers

• Loss of rent: if a tenant defaults, or the property is uninhabitable after an insured event.
• Tenant-caused damage: accidental or malicious damage beyond the bond.
• Legal liability: if someone is injured at the property and the owner is found liable.
• Legal expenses: costs associated with certain tenancy disputes.

How it differs from building insurance

Building insurance covers the structure against events like fire and storm; strata properties usually have this arranged by the strata company. Landlord insurance covers the risks specific to leasing: rent default, tenant damage and liability. Most investors who choose cover hold both.

Is it worth it?

A typical policy costs a few hundred dollars a year, generally tax-deductible against your rental income, while a single serious rent default can cost many times that. Even with a quality tenant and a well-managed bond, circumstances change: job loss, relationship breakdown and hardship are the usual causes of default, and none of them are screened out at application.

We’re not insurance brokers and this isn’t financial advice, but we can share exactly what we’ve seen claims cover for owners we manage, and what questions to ask an insurer. Talk to your property manager before deciding.