A common question we hear in property management is, “Do I really need landlord insurance?” Our response is always the same: “Can you afford not to protect your investment?”

With today’s challenging market conditions, it’s understandable that many landlords are looking for ways to reduce costs. However, landlord insurance should never be seen as an optional expense. It is an essential safeguard and without it, you’re leaving yourself exposed to significant financial risk.

The most important consideration when choosing a landlord insurer and policy is to review the Product Disclosure Statement (PDS). Every insurer is different, with variations in premiums, exclusions, claim limits, waiting periods, and excesses. For example, some insurers don’t automatically cover flood, or may have strict conditions around loss of rent.

In general, landlord insurance can provide protection across four main areas: building, contents owned by the landlord, loss of rental income, and legal liability. Depending on your policy, some common examples include:

Loss of rental income
Whilst property managers do their best to screen tenants for their financial capacity to pay the rent, sometimes a tenant’s circumstances change beyond their control, leading to delayed or non-payment of rent. Some policies may cover loss of rental income due to tenant default, absconding tenants or if your property becomes uninhabitable due to an insured event such as storm, flood, or fire.

Contents owned by the landlord
These may include contents that are damaged by tenants or their guests (malicious or accidental, depending on your policy), or from an insurable event such as a natural disaster, water damage (whether by flood, rainwater, or burst pipes), that have been left for tenant use, such as ride-on mowers, carpets, curtains, blinds and more. Landlord insurance does not cover tenants’ personal belongings and tenants must take out their own contents insurance policy.

Building
Policies may include damage to the property’s structure caused by tenants or their guests (malicious or accidental, depending on your policy), or from insurable events such as storm, fire or flood.

Legal liability
If someone is injured at your property and takes legal action against you, landlord insurance may cover legal costs and compensation. Having landlord insurance could be the difference between a manageable claim instead of leaving you with a potential financial disaster.

Landlord insurance is more than another expense, it’s protection for your investment and peace of mind. The next time you hear someone ask, “Do I really need landlord insurance?” you’ll know why our answer is always going to be a firm “yes.”