When do you need landlord insurance?

If you're a landlord, your rental property is probably a sizeable investment. Suppose something unexpected happens to that property and leaves it unable to be rented. In that case, it's not just the cost of repairs that you'll be on the hook for — you could be facing weeks, if not months, of lost rental income.

That's why the right landlord insurance coverage is essential.

What does AAMI Landlord Insurance cover?

Building liability cover 

It can help you cover potential legal costs if someone suffers an injury, death or property damage in connection with your rented property and you’re at fault. Legal liability cover can help protect you for up to $20 million in costs, but limitations apply.

Tenant damage

One of a landlord’s worst nightmares is tenants who intentionally damage their property or steal their belongings. That’s why you should consider Tenant Protection, available as an optional cover, for an additional cost, with AAMI Landlord Insurance.

On top of that, Tenant Protection may cover you for lost rent caused by tenants failing to pay. Find out more about Tenant Protection, including limits and exclusions.

Insured events

Flood

For example, say your rental property is close to a river, and it's been a particularly wet season, causing flash floods in the area. You could be covered for some damages if your property is affected.

Storm

Let's say a storm hits your city, and the wind damages your rental property's roof. You could be covered when it’s time to fix it if you have the right landlord insurance.

Storm damage is one of AAMI’s most common claims, so this is a biggie.

Fire

In the sad event of your investment property being affected by a bushfire, you could be covered for loss or damage that is caused by fire and heat, ash, soot and smoke that is a direct result of a fire within 100 metres of the insured address.

Other insured events

• Storm surge
• Lightning
• Earthquake and Tsunami
• Theft or burglary
• Escape of liquid
• Impact
• Damage by an animal
• Explosion
• Riot, civil commotions or public disturbance, and
• Malicious acts or vandalism.

There are other covers you can claim – depending on your policy cover.

Do I need contents insurance too?

Taking out just building insurance is an option, which may cover you for the most expensive and potentially catastrophic events. After all, most of the stuff inside the house probably belongs to your tenants, who can sort out their own contents insurance.

However, you may be renting out a furnished property. In this scenario, your tenant’s contents insurance won’t cover your things. Landlord building insurance may also not cover you for unfixed household goods and furnishings you own. This could include carpets, rugs, blinds, furniture, appliances (like washing machines and dryers) and artwork. Find out more about AAMI Landlord Contents Insurance.

Of course, with AAMI, you can bundle Landlord Building Insurance and Contents Insurance to get the highest level of coverage.

Explore AAMI Landlord Building & Contents Insurance

What doesn’t landlord insurance cover?

AAMI Landlord Insurance will cover damage to or loss of your property’s buildings — the house itself and permanent structures like garages and carports — after weather events like floods, storms, fires, and so on. You may also be covered for unfortunate events like break-ins.

It does have some limitations, though. We recommend you check out the Product Disclosure Statement (PDS). It's not the most riveting reading, but knowing exactly what and when you’re covered is important.

When should you consider taking out landlord insurance?

It can be helpful to purchase landlord insurance when you sign an agreement with your property manager. If you do, it could provide cover before your property is open for inspection. For example, if someone injures themself during an inspection and decides to pursue damages, your liability may be covered.

If you plan to manage tenants yourself, consider landlord insurance before finding the right people to move in. Check with your insurer about their coverage in these situations. 

You’ll need a rental agreement with your tenant if you want insurance for loss of rent under the AAMI Landlord Insurance optional cover.

Home insurance or landlord insurance?

Deciding between the two should be easy.

• Home insurance is usually designed for the building you own or are responsible for and used primarily for domestic purposes.
• Landlord insurance is usually designed for rental properties tenants use as their permanent residence.

Long-term rental properties

When a tenant uses your investment property as their permanent residence, you may find landlord insurance helpful.

Short-term rental properties

Home and landlord insurance may not cover related loss, damages, or legal liability if you profit from your property with short-term arrangements.

Business activities not covered by AAMI Landlord Insurance include short-term rentals, holiday letting or house-sharing arrangements, including online booking arrangements such as Airbnb or Stayz.

In these situations, considering short-term rental or host protection insurance may be a good idea if offered by online booking service providers.

Guests paying to stay in your home with you

If you rent a room to a paying boarder or tenant, you won’t be covered under AAMI Landlord Insurance. Landlords don’t usually reside at the properties they lease and typically rent out a home in its entirety.

Your typical home insurance policy may not provide coverage for boarders under a short-term rental either. Be sure to check with your insurer when it comes to this living arrangement.

More about AAMI Landlord Insurance

Read more:

• How much insurance do you need for bushfire protection?
• Home insurance and legal liability: What you need to know
• How to prevent home burglary

Home and Landlord insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Limits, conditions and exclusions apply. Information provided is general advice only and has been prepared without taking into account your particular objectives, financial situation or needs so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination (TMD) is also available.