Is it worth getting landlord insurance?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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If you have a property you are renting out, you may be worried about damage and what you can do to protect yourself and the value of said property. The logical solution calls for landlords’ insurance, which is, by most standards, a good idea. However, we need to look into it and assess the option from every point of view, in order to determine whether or not it’s worth the extra cash.

Landlord’s insurance covers some things, but not all.

The first thing you should know is that the majority of insurance policies will cover in case of a destructive storm, fire, or other natural disasters, in case of theft, and it will also cover fittings and fixtures and the building.

However, you may want to keep in mind that insurance will not cover for thoughtless tenants who don’t really care about your property or preserving it the way you would like. Let’s look at what landlord’s insurance does cover:

  • Potential legal expenses, in case you take legal action against a tenant who did not comply with the agreement or contract
  • Rent, in case the tenant evacuates at an earlier date than planned or defaults on payment
  • Theft at the hands of your tenants or guests of theirs
  • Liability, should a tenant make a claim against you
  • Malicious damage caused by your tenants or any of their guests

Landlord’s insurance costs extra, but it protects you and your property

Now, it’s true that this insurance is going to cost you extra money every month – money you may not necessarily be willing to shell out of pocket – but you also have to keep in mind the fact that disagreements and problems between landlords and tenants are pretty much par for the course.

While there are plenty of lovely people who make excellent tenants, there are also disrespectful people who will cause problems, and you want to give yourself a safety net in case something does go wrong.

In addition, it is possible that your insurance premium is tax deductible, so you may be able to get your money back. If you are diligent about keeping receipts and handing them over to your accountant, you will be able to get a bigger tax return.

If you do decide to take out landlord’s insurance, remember that not all policies are the same, so you have to pay attention to the details and the differences between them. Some will cover everything, while others may require you to take out a separate contents or home insurance.

Pro tip: you have to read the Product Disclosure Statements very carefully to see what you are covered for, or not. In conclusion, landlord’s insurance is worth it, in most cases and for most people, because it provides peace of mind. Sure, it requires you to pay extra, but you may be eligible for a tax return, and you will be sure that your property is protected, in case something happens, whether it’s a natural disaster or a destructive tenant.

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