While landlord insurance is not a legal requirement under strata legislation, it can provide an important additional layer of protection. This is because there are often gaps between what is covered by strata insurance, what may be covered under personal contents insurance and what ultimately becomes the responsibility of the lot owner.
Without the right cover in place, landlords may face the risk of being exposed.
Every tenancy arrangement is different. Whether your property is used for short-term accommodation, long-term rental, or holiday letting, there is always a level of uncertainty around what may occur during a tenancy. Landlord insurance can help mitigate these risks and provide greater peace of mind.
What can landlord insurance cover:
free standing house v strata?
Landlord insurance protects investment property owners against financial losses from physical damage to the building/contents and tenants related risks, including legal liability, loss of rent and in some cases rent default or malicious damage. In a strata building landlords insurance focuses more on tenant related risks and internal contents, it does not look to cover the building as this is already captured under the strata insurance. Key covers include loss of rent, malicious or accidental damage by tenants and liability for accidents that arise inside the lot.
Why the right cover matters
The level of risk associated with a rental property can vary depending on several factors, including:
- The type of letting arrangement
- The location of the property
- Exposure to catastrophes or severe weather
- The risk of break-ins or malicious damage
These factors can all affect the type and extent of cover you may need. Without the right policy in place, landlords may find themselves exposed to costs that are not covered elsewhere.
Public liability protection
One of the key benefits of landlord insurance is that it often includes public liability cover, commonly between $10 million and $20 million.
Although strata insurance typically includes public liability, this protection usually applies where the building or common property is considered responsible. It may not extend to claims made directly against a landlord.
Where legal action or a claim is made against a lot owner personally, it is typically the owner's responsibility to manage and defend the matter. Public liability cover can therefore be particularly valuable in situations where:
- A third party's property is damaged
- Someone is injured on the property or in an exclusive use area
- A death occurs and the landlord is alleged to be liable
- The landlord is accused of negligence, even incorrectly
In circumstances like these, having landlord insurance can provide essential protection and support.
As with any insurance policy, exclusions apply. Generally, landlord insurance does not cover:
- The tenant's personal belongings
- Building elements or common property that form part of the strata scheme
If I purchase a strata property as an investment, what insurance should be in place?
In a strata environment, different parties are responsible for different types of insurance. To ensure appropriate protection, three key types of cover are commonly involved:
Together, these three types of insurance help ensure that the building, the landlord's interests, and the tenant's personal property are each appropriately protected.