Landlord insurance vs home insurance

Landlord insurance vs home insurance

Home insurance can provide cover for a number of challenges you may face as a homeowner, including if your house burns down, if there’s a break-in and even the medical bills if someone gets hurt on your property.

However, if you decide to rent out your home, a regular home insurance policy may not be sufficient, and you may need some extra cover options designed specially for landlords. So, between landlord insurance vs home insurance, which one should you invest in?

How is landlord insurance different from home insurance?

You can typically opt for home insurance that provides two types of cover: protection for your home (the building) and your belongings in it (contents). On the other hand, landlord insurance may cover everything that your home insurance does, as well as extra protection for problems you may face as a landlord.

Landlord insurance offers three types of cover: building, contents and business. In this case, business refers to your tenant, and you will get cover for any issues or damages your tenants might cause. For example, in case of loss of rental income or legal expenses to evict a tenant, home insurance will not provide cover, but landlord insurance usually will.

What’s included in a landlord insurance policy?

Inclusions, exclusions and extras generally differ between providers. However, there are a few primary coverage areas that most landlord insurance policies cover.

  • Building and contents: As mentioned above, building and contents are subsets of the landlord insurance policy. So, you will often get cover to any damage caused to the structure of the property from fire, flooding, vandalism, theft, etc. You will also often get cover for any damages done to the possessions in the house, including carpets, curtains, kitchen appliances and furniture. 
  • Loss of rent: Landlord insurance will sometimes provide cover in case of rent loss, which includes the tenant failing to make rental payments, eviction of the tenant by court order or the death of the tenant. In most cases, you will also get cover for the fees incurred if you require legal support while evicting a tenant. 
  • Public liability: If a person trips on a tree root in the driveway or tumbles down the stairs and injures themselves in your property, landlord insurance will provide public liability cover for the medical and legal costs.
  • Damage by tenants: Tenant damage is a standard inclusion in landlord insurance policies, which provides cover if your tenant or their visitors cause accidental or malicious damage to the property. Some policies may have separate covers for malicious damage and accidents, so ensure you read the PDS document carefully.

Is there a difference between renters insurance and landlord insurance?

While landlord insurance will provide cover to any damages to the property caused by the tenant, a tenant is responsible for their own possessions, including their clothes, furniture, electrical appliances, books, and other belongings. So, if a disaster occurs, tenants often lose everything and miss out on the compensation.

If you’re a tenant, it may be worth looking into renters insurance, which is a form of contents cover for people living in rented properties. If you’re a landlord, some agents recommend making renters insurance a condition of your lease.

Is home insurance required if you already have landlord insurance?

If you take out building and contents insurance as part of your landlord insurance, you may not need an additional home insurance policy - depending on what the policy covers. But, if you only opt for tenant protection, you will not be covered if the contents inside the house are broken or stolen.

Did you find this helpful? Why not share this article?

Advertisement

RateCity
ratecity-newsletter

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.

Advertisement

Learn more about home insurance

Type of home insurance do I need?

There are two types of house insurance policies, namely total replacement cover and sum insured cover. The former covers the total cost of rebuilding the house to the same standard before it was damaged. The latter home insurance type covers the cost of damages up to a predetermined limit, which is called the sum insured.

Different types of homeowners’ insurance may offer extra cover at an additional premium, including accidental damage, fire insurance, storm insurance, flood insurance, motor burnout insurance, home and contents insurance, and contents insurance. These extras are not classified as homeowners’ insurance types; include one or more based on your situation. 

What is home insurance?

For homeowners, home insurance can provide some financial protection to your property when things don’t go as planned. If you have home insurance and your property is damaged (or even the permanent fixtures inside), you could make a claim to your insurer to cover the costs of getting it fixed, replaced or rebuilt.

The idea behind property insurance is that you pay insurance providers to take on the risk of loss or damage to your property that you would otherwise be carrying. 

Do I need home insurance?

While homeowners' insurance is not legally required, it’s an option for those who want financial protection for their property. Some mortgage lenders may even require borrowers to take out home insurance.

How much is home insurance?

How much your home insurance could cost and the amount of premiums you pay will depend on many factors, including the amount you need to cover, the excess you're willing to pay, and what type of cover you want to take. 

It's important not to base your insurance policy decision solely on the premiums being charged, reviewing what the policy covers, its features, claim exclusions, and caps when deciding which home insurance policy is the right one for you.

Do I need home insurance for a home loan?

While home insurance isn’t necessarily a requirement for a home purchase per se, it’s likely that if you’re purchasing a home with the help of a home loan, you’ll need to take out home insurance on the property. Home insurance can be one of the factors required in the pre-settlement documentation for a home purchase, and you may be advised by either the bank or a broker (or both) ahead of settlement.  

How to cancel your ANZ home insurance

You can cancel your ANZ home insurance policy at any time by making a request in writing. The cover is discontinued once the insurer receives your cancellation request.

If you cancel the policy before the premium due date, the insurer will retain the amount for the duration in which it was in force. A proportionate amount of the premium is refunded for the period between the receipt of the cancellation request and the next due date.

You can also cancel ANZ home insurance during the cooling-off period, which is 21 days from the start of the policy. To cancel the policy, you should send a written request along with the schedule to the nearest branch before the end of the cooling-off period. However, if you have filed a claim during the period, the insurer is unlikely to refund the premium amount.

Can you transfer home insurance?

When you sell your home, you cannot transfer the home insurance policy to the new owner. The buyers need to purchase a new home insurance policy where the insurer will calculate the premium based on several factors.

The risk of any damage to the home is transferred to the new owners when you sell the property. You can speak to an experienced conveyancer or solicitor to find out more about when the risk gets passed to the buyers in your state or territory.

If you move to a new home

Can you transfer home insurance to a new property if you move to a new home?

Some insurers may allow you to transfer your policy to a new property as long as you meet certain conditions. These include informing the insurance company as soon as you enter into a contract to buy the new home. You may need to pay an additional premium when transferring your existing home insurance policy to the new property.

Does home insurance cover tenant damage?

If you have a property that you rent out to tenants, you may ask, does home insurance cover tenant damage? Generally, as a landlord, you’ll require a different type of insurance policy than a regular home and contents insurance that offers coverage for the unique situations faced by landlords.

Landlord insurance

As a landlord, you must insure against additional risks to protect your investment. A landlord home and contents insurance policy covers loss due to natural disasters, storm, and fire. Generally, it also covers fixtures like stovetops, light fittings, window coverings, carpets, and ovens.

Additionally, you may protect yourself against any loss arising due to damage to your property caused by your tenants or their guests. Some landlord insurance policies may also protect you against financial loss due to unpaid rent.

Does homeowners insurance cover tenant damage? In most cases, regular homeowners’ insurance policy will not cover such damage. It’s always best to refer to the product disclosure statement (PDS) to clearly understand what is included and excluded from your home insurance policy.

What does home insurance cover?

What home insurance specifically covers and the extent of the coverage depends on the insurance provider and the individual policy. However, home insurance typically covers the property and other permanent structures found on or in the property, such as fences, in-ground swimming pools, garages, and dishwashers, to name a few.

There are usually two types of homeowner's insurance you can choose from, with "total replacement cover" or "sum-insured cover". 

If you’re not sure which option to take, it may be worthwhile to speak to a professional valuer to understand how much it might cost to rebuild your home and replace what's inside.

Does home insurance cover accidental damage?

Home insurance offers cover for any damage to your house and most policies cover the main building, garage, permanent attachments, and other external buildings that can be locked. 

Every insurance policy lists the defined events that will be covered, such as fires, floods, lightning strikes, theft, or falling trees. A few may also offer the option of accidental damage home insurance cover for other possible mishaps and unintentional damage around the home, such as when the dog knocks over the TV, or when red wine is spilled on the carpet.

The home insurance accidental damage cover is available only for the address provided at the time of buying the policy. 

Do I need legal cover on home insurance?

Besides protecting your home and your possessions from damage and theft, many home insurance policies also cover unfortunate accidents that sometimes result in legal action. This is called home insurance legal cover.

What does it cover?

This type of insurance cover protects you and your family members from liability if someone gets injured on your property. You can also get coverage for scenarios such as you or a family member accidentally injuring someone else outside your home or accidentally damaging someone else’s property. 

Typical liability claims include slips and falls in your home and the ensuing medical expenses, or falling trees or branches that cause  damage to your neighbour’s home or parked car.

Dog bites are another claim often covered. If your dog bites someone and you’re found liable, you’ll be covered for the vet and medical bills. Similarly, if your dog damages someone else’s property, home insurance legal cover will often take care of your liability.

Every member of your family is usually automatically included in home insurance legal cover provided they live with you.

Is my home insurance covered for weather damage?

It is important to understand what is covered and what isn't covered in your home insurance policy before purchasing it. One crucial point to consider at the time of evaluating home insurance policies is whether it includes home insurance weather damage cover, and what it actually means if it does.

Typically, the protection afforded by home insurance actually depends on how the home was damaged or affected by conditions. The whole idea behind home insurance is to protect you from loss or damage against an unexpected, sudden event, like a fire or storm. If your home was in the way of a storm and your roof was damaged, which also caused internal water destruction, you may be covered for the damage to the roof and the property. The same holds true for walls or a fence that got damaged in a storm or flood.

However, you may not be covered if the damage occurred because your property was not well maintained and your home suffered a leak. A poorly maintained fence is less likely to be covered by home insurance.

What is a home insurance premium?

Your home insurance premium is what you pay your insurance provider for covering your home under their home insurance policy. It is calculated based on the type of coverage you choose for your home as well as any additional coverage you buy for either your possessions or specific incidents. Your premium can either be paid annually or in smaller instalments. 

Your home insurance policy may cover the total replacement cost, which is the actual expense of rebuilding your home from scratch. Alternatively, it can cover an insured sum, which is a predetermined estimate of what it might cost to rebuild your home. You’re more likely to pay a higher premium for total replacement cover than for insured sum coverage.

Apart from selecting your coverage, you’ll have to figure out your excess, which is the amount you pay out of your own pocket for each insurance claim. If you are okay with paying a higher excess, your insurance premium may be lower. Conversely, if you choose a lower excess, you may pay a higher premium. 

Your insurance premium can also be higher if you live in an area prone to incidents like floods, bushfires, or theft, as insurers are more likely to receive a higher number of claims in such neighbourhoods. 

If you also want to buy insurance for your belongings, a combined home and contents insurance policy may have a lower premium than paying premiums on separate policies for your home and your belongings. 

Does homeowner’s insurance cover electrical problems?

Every home has a range of electrical fittings,appliances and wiring running through the structure of the house. You can face many kinds of electrical problems but, unfortunately, your home insurance policy may not cover all of them. Damage accidentally caused by natural accidents may be covered, as might the repair of motors if you have opted for fusion damage cover. For example, if there’s a lightning storm and your home suffers a power surge which causes a short circuit, any repairs needed may be covered if your homeowner’s insurance contains lightning damage.

However, if any electrical appliances stop working, even a home and contents insurance policy may not cover the cost of repairing the appliance. Also, you should check with your insurer about making any electrical repairs inside your home as that may affect your coverage. 

Usually, in Australia, you need to hire a professional electrician to carry out any inspections or repairs to the electrical system in your home. This can include conducting periodic checks to make sure the electrical wirings are not exposed to seepage, flooding, or attacks by rodents. Consider asking your insurance provider about optional coverage for fixed electrical appliances such as air-conditioners and washing machines.