When might you consider landlord insurance?

By AAMI 21 April 2021

If you own an investment property or manage a short-term rental, it can be tricky to work out whether you fit into the category of “landlord.”

A landlord is someone who owns a property that is rented out to another person or a business — that is, a tenant. These leased properties can include houses, apartments or even land.

So, if you are a landlord, you may find it useful to understand if landlord insurance is right for you and your property.

What is landlord insurance?

Landlord insurance can help provide cover for damage to, or loss of, a property. Covered events can include fire, theft and extreme weather, as well as your legal liability for injury or property damage to third parties. Landlord insurance generally doesn’t just cover the leased building — it can also cover related permanent structures, such as garages and sheds.

If you own an apartment, it may be worth checking whether you’re covered by strata insurance administered by the body corporate. This may affect the type of landlord insurance policy you choose.

With AAMI Landlord Insurance, you can also add optional Tenant Protection to your policy for an additional premium. This can cover you in the event of unpaid rent, theft and malicious damage caused by tenants and their guests. Just so you know, limits, conditions and exclusions apply. Read the Product Disclosure Statement (PDS) to know what is and isn't covered.

More about AAMI Landlord Insurance

When might you consider taking out a policy?

If you think landlord insurance might be right for you, depending on your policy, you may find it useful to purchase it when you sign an agreement with your property manager. If you do so, it could provide cover before your property is open for inspection. If — for example — a potential tenant injures themselves during a viewing and decides to pursue damages, your liability may be covered.

FYI, you’ll need to have a rental agreement in place once your tenant moves in, particularly if you want to be insured for loss of rent.

Home insurance or landlord insurance?

Deciding between the two shouldn’t be too tricky.

Home insurance is usually designed for the building that you own or are responsible for and use primarily for domestic purposes.
Landlord insurance is usually designed for long-term rental properties used as a permanent residence.

Long-term rental properties

When your investment property is leased to a tenant under a long-term agreement, you may find landlord insurance useful. For more info, check out our guide to landlord insurance.

Short-term rental properties

If you profit from your property with short-term arrangements, Home and Landlord Insurance will not cover related loss, damages or legal liability. Business activities not covered by AAMI insurance include short-term rentals, holiday letting or house sharing arrangements (including online booking arrangements such as Airbnb or Stayz).

In these instances, it may be useful to consider short-term rental insurance, or the host protection insurance if offered by online booking service providers.

Guests paying to stay in your home with you

If you rent a room to a boarder or tenant, you may not think of yourself as a landlord. Landlords don’t usually reside at the properties they lease and typically rent out a home in its entirety.

If this is your situation, you might consider a home insurance policy as it could provide cover for this type of scenario, but you should read the policy terms to see if it suits your circumstances.

Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the Product Disclosure Statement before buying this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.