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Do apartment owners need insurance?

If you own an apartment in a multi-story building or complex, you should consider insurance for your apartment. Why? Because your body corporate’s insurance covers the apartment’s structure, but it won’t cover the inside of your apartment. You’ll need a contents insurance policy to cover your belongings, internal walls, fixtures and fittings inside your apartment.

If you’re leasing out your apartment to a tenant, you might also consider getting landlord’s insurance, as well as contents insurance if your apartment is rented out furnished.

Do renters need apartment insurance?

Renters don’t need apartment insurance, but may consider contents insurance to protect their belongings.

 

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Frequently asked questions

What is apartment insurance?

Apartment insurance isn’t a specific product you can purchase. However, you can help safeguard your apartment through:

  • strata insurance: this covers the building and your apartment’s structure if it’s damaged, and is paid through your body corporate fees if your property is under a strata title.
  • contents insurance: this covers damage to interior walls, fixtures, and fittings, as well as damage or theft of contents in your apartment).
  • landlord insurance: if you’re renting your apartment to tenants, this can cover your liability if someone is injured on the property, your losses if your tenants can’t pay rent and more.
Why is insurance for your apartment important?

There are six reasons it’s important to get insurance for your apartment.

  1. An apartment is a valuable investment that you wouldn’t want to risk losing. If your apartment was damaged or destroyed, could you afford to rebuild it out of your own pocket?
  2. What about the contents inside? You could have thousands of dollars’ worth of valuables in your apartment that would cost a fortune to replace without insurance.
  3. Just because you’re living in an apartment, doesn’t mean your apartment isn’t susceptible to damage and the contents inside it can’t be stolen. For example, the apartment above you could easily have a leak which ruins your belongings, or someone could break into your apartment when you’re not there.
  4. If you’re renting out your apartment to tenants, landlord insurance can protect you from liability if your tenants or their visitors are injured within your property, and you’re at fault – this can save you from potentially expensive legal fees.
  5. Landlord insurance can also cover your losses if your tenant defaults on payments, can’t pay their rent or breaks their lease early – this helps cover the rent while you try and find a new tenant.
  6. Some landlord insurance policies may even cover malicious damage that your tenants inflict on your apartment, saving you from having to pay for repairs out of your own pocket.
What do the different types of insurance for your apartment cover?

If you have strata insurance for your apartment, it typically covers loss or damage to your apartment’s external structure, caused by certain events like flooding, storm, fire, and more.

On the other hand, if you have a contents insurance policy for your apartment, it covers your apartment’s internal walls, fixtures and fittings (i.e. kitchen cabinetry) if they’re damaged or destroyed from certain events as well as your contents inside the apartment.

It also covers your personal belongings in the apartment if they’re stolen, or if they’re damaged or destroyed by several causes (e.g. fire, storm, rainwater damage).

Contents insurance can cover such possessions as:

  • appliances
  • artwork
  • clothing
  • collectables
  • furniture and furnishings (i.e. beds, tables, couches, curtains and blinds)
  • jewellery and watches
  • technology (i.e. laptops, TVs).

If you’re leasing out your apartment, you can get landlords insurance which can cover:

  • damage to your apartment’s structure;
  • your legal liability if someone is injured on your property (and you’re at fault); and
  • loss of rent you might incur if your tenant defaults on payments, can’t pay their rent or breaks their lease early.

It’s important to check your PDS to determine exactly what’s covered by your policy.

Do I still need insurance for my apartment if I pay body corporate or strata?

If your apartment is under strata title and you’re paying body corporate fees, chances are high your body corporate will have taken out strata insurance that covers the building therefore there would be no need to take out home/building insurance. Your strata insurance generally covers your building, external walls, gutters, balcony, ceiling and shared facilities, such as:

  • common areas
  • elevators and stairways
  • gardens and gardening equipment
  • car parks
  • tennis courts
  • swimming pools.

However, if required, you’ll need contents insurance to cover fixtures and fittings inside your apartment, such as interior walls, fixtures and fittings (i.e. your kitchen fit-out, bathroom cabinetry) or your personal belongings (i.e. furniture, appliances, carpets, etc.).

Do I need insurance for my apartment if I lease out my apartment?

If you pay body corporate, strata insurance can cover you for damage to your apartment’s structure. However, you should consider taking out necessary insurance to cover the tenants you’re renting out your apartment to, and to protect any belongings you may have left in the apartment.

Landlord insurance can cover you for loss of rent and rental default (if your tenants break lease early or can’t pay their rent) and legal liability (if someone is injured in your apartment and you’re at fault). Some landlord insurance policies may even cover malicious damage to your apartment caused by your tenants.

If you’re leasing out a furnished apartment, you may also want to consider taking out contents insurance. If you’ve left appliances and furniture in your leased-out apartment, a contents insurance policy can protect them against damage or theft.

As an apartment owner, it’s your responsibility to protect your investment; the only thing you’re not responsible for are your tenants’ belongings.

Do I need insurance for my apartment if I’m renting?

If you’re a tenant in an apartment, you won’t need to take out insurance for the structure of the apartment itself – that’s the responsibility of the owner. However, you will be responsible for protecting your personal belongings from damage and theft, which you can do with a contents insurance policy.

What type of insurance covers damage to the building or shared facilities of my apartment?

Damage to the building (i.e. external walls, balconies) or shared facilities (i.e. swimming pools, common areas, lifts, car parks) is typically covered through strata insurance, which is paid for through body corporate fees.

Are building defects or faults covered under insurance for my apartment?

No, claims for building defects or faults are generally not covered by any type of insurance; most, if not all, insurance policies typically have a defects exclusion.

Can I reduce the cost of insurance for my apartment?

There are a number of factors that can affect the cost of your contents insurance premium. These factors may include:

  • the value of your belongings
  • how secure your apartment is
  • the age and structure of your apartment
  • the oldest person living in it
  • risks of natural hazards, and more.

You can potentially reduce the cost of contents insurance for your apartment if you:

  1. live in an apartment or building that has tight security – the harder it is for burglars to get in, the less chance that your belongings will be stolen.
  2. live on a higher floor – apartments on lower floors may have a higher chance of being broken into, as they are more convenient to access.
  3. live in a less risky suburb – apartment buildings that are located in suburbs with a lower crime rate may seem like a safer bet to insure.
  4. live in a sturdy building – your insurer will look at the age of your building and the materials used in its construction to determine its risk of withstanding damage.
  5. opt for a higher excess – if your insurer allows you the choice of paying a higher excess when you need to make a claim, this can reduce your premium.

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