Have you reviewed your landlord insurance recently?

6-minute read

What you’ll learn

• What is landlord insurance?
• What’s covered and what’s not?
• Why a regular review is important – and what to consider
• Why choose tax time for your review?
• Property maintenance tips

 

Whether you review your insurance now or choose to do it a different time, this article looks at some of the reasons why a review can be a valuable part of your property investment strategy.

Understanding landlord insurance

What is landlord insurance?

Landlord insurance is designed to cover financial losses that investment property owners might experience with renting out their property. Unlike standard home insurance, landlord insurance provides cover for risks that are unique to investment properties.
 

If you already have landlord insurance, you’ll be aware of the benefits for your property investment. However, if you are wondering what insurance is best for landlords, then you can find out more in this helpful article: What you need to know about landlord insurance cover.

What does landlord insurance cover?

Landlord insurance can cover the physical structures of the building like the garage, fences, built-in appliances, hot water systems, air conditioners and more. It also covers any contents that are owned by the property investor and left for the use of the tenant like furniture, carpets or even a BBQ.
 

Depending on the options offered by the insurer, landlord insurance may cover things like:

• Loss of rental income.
• Property damage from events like storms, fire and floods.
• Malicious damage or theft by a tenant.
• Legal liability if someone is injured on your property.

As with all insurance, eligibility criteria and exclusions may apply. So, it’s a good idea to discuss the options for your property investment and what’s available with your insurer. 

What isn't covered?

Just like with other insurances, landlord insurance has common exclusions. These vary depending on the insurer, but could include things like:

• General wear and tear.
• Loss of rent due to a voluntary vacancy.
• Short-term Airbnb-style rentals.
• Major renovations where you haven’t notified your insurer.
• Lack of routine maintenance.

You should check your insurer’s PDS for full details of what is covered – and what isn’t – to make sure your cover suits your property investment. You can find out more about what’s covered by Westpac Landlord Insurance (provided by Allianz) – and what’s excluded – in this helpful article ‘Understanding your Landlord Insurance cover’.

 

Review your landlord insurance cover regularly

If there have been any changes to your investment property you probably want to make sure your current policy is still fit for purpose. Perhaps you’ve done some upgrades or renovations, or the cost to rebuild your property may have increased over time. No matter what, it’s always good to regularly review your landlord insurance cover.
 

Here are some questions to ask yourself:

1. Are you insured for enough?

The cost of building materials and labour has increased in the last few years, and this will have a direct impact on what it costs to repair or rebuild your property in the event of a claim. If your property is underinsured, you could find yourself financially out of pocket if you have to make a major claim.
 

These insurance calculators¹ are helpful when thinking about your sum insured.

2. Does your current policy cover what you need?

It’s a great idea to refresh your memory and look at what your current policy covers. A quick check may also reveal if there are any gaps in your cover given your current situation or any improvements you’ve made.
 

Landlord insurance policies sometimes offer optional extras and this could include things like flood cover, loss of keys, pet damage cover or rent default protection. Adding these (if they aren’t already part of your cover) could provide additional protection for your investment property and save you money and stress in the long term. 
 

Don’t forget, if your investment property is part of a Strata, taking out Landlord contents insurance is a great way to ensure any items you’ve left for the use of the tenant are also covered.

3. Are you happy with the premium price?

It doesn’t hurt to do a price check to make sure you’re getting the best value from your current landlord insurance policy. When you are getting quotes, it’s important that you compare like-for-like to get an accurate result. And don’t be afraid to swap to a more suitable policy if you find one – just make sure the dates line up so you are covered during the changeover.
 

Once you have taken the time to conduct a review of your landlord insurance policy and have compared it to your current situation, you’ll be able to relax knowing your investment property insurance is up to date.

When is the ideal time to review your rental property insurance?

There’s actually no ‘right time’ to review your landlord insurance, it is completely up to you. However, many property investors use 30 June as an end point to get their investment property administration in order, including rental property insurance.
 

You may be able to claim your landlord insurance premium as a tax deduction, to maximise your investment property tax deduction benefits, by paying the annual premium upfront (and ideally before the end of the financial year). This could allow you to claim a larger deduction in this financial year, thereby potentially reducing your taxable income. 
 

Landlord insurance may not be the only tax-deductible expense. The ATO rental property guide from the Australian Tax Office contains handy information sheets and FAQs about rental properties including what you can and can’t claim on your tax return. 
 

Your tax accountant can also help you understand your individual circumstances and what you may be able to claim as investment property tax deductions.

 

Regular maintenance on your investment property

When you aren’t living in a property day to day, small drips and cracks can easily slip under the radar. And while these things aren’t usually covered by landlord insurance, not staying on top of them may lead to bigger issues down the track if nature strikes and you need to make a claim. 
 

Regular maintenance helps keep your property in great condition. Simple steps like clearing gutters, checking rooftops and other external areas for signs of wear and tear, inspecting flexi hoses under your sinks for twists and kinks, and checking for blocked pipes can make all the difference. Check out this simple home maintenance checklist for more information.

TIP: Stay on top of repairs and maintenance 

Did you know, a significant cause of disappointment at claim time comes from having a claim for damage denied or reduced because of lack of repair and maintenance? That’s why keeping your investment property in good shape can prevent small issues becoming bigger problems. 
 

Examples of property maintenance include:

• Repainting walls every few years
• Re-staining a wooden deck
• Cleaning a swimming pool
• Maintaining the lawn and garden
• Conducting pest control
• Fixing a broken window
• Servicing air-conditioning units
• Replacing damaged roof tiles

Staying on top of repairs and maintenance is a way to help keep your investment property in good order, and may also help you maximise your investment property tax deductions.
 

If you’re unsure whether the work you need to undertake on your investment property could be considered repairs and maintenance (that may also be eligible for investment property tax deduction), you should talk to your tax accountant.