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
These items are typically covered under other types of insurance.
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:
Strata Insurance
Arranged by the owners corporation, strata insurance generally covers the building structure and common property, such as roofs, walls, shared facilities, and other structural components of the complex.
Landlord Insurance
Arranged by the individual lot owner, landlord insurance is designed to protect the owner's interests as a landlord, including risks associated with renting the property to tenants and items within the lot that belong to the owner.
Tenant Contents Insurance
Arranged by the tenant, contents insurance covers the tenant's personal belongings within the property, such as furniture, electronics, clothing, and other personal items.
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.
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In most cases, the lot owner is responsible for managing any matters relating to their landlord insurance. However, every strata scheme can operate a little differently, so it is always worth confirming the arrangement with both your letting agent and your strata manager.
Depending on the setup, a letting agent may be able to act on the landlord's behalf when urgent repairs are needed or when an insurance claim arises. They can also help provide access for loss adjusters, obtain repair quotes, and support the owner throughout the claims process.
If the lot owner has an agreement in place for the strata scheme to act on their behalf, Cohabit may also be able to assist. Before stepping in, we would simply need to review that agreement so we can confirm the arrangement and our authority to help manage the claim on behalf of the policyholder.
Once confirmed, Cohabit can act as a helpful point of contact between the policyholder and the insurer throughout the claims process. This may include coordinating repair quotes, working alongside the insurer's loss adjuster, and keeping the owner updated every step of the way.