Landlord insurance in New South Wales (NSW)

Taking out landlord insurance for your property in New South Wales (NSW) provides you with financial protection in case of unforeseen incidents and insured events relating to your investment property.

Landlord insurance can help with the cost of repairing or replacing property damage caused by tenants, natural disasters or other unforeseen events. Landlord insurance can also contribute to losses the landlord might incur as a result of loss of rental income, tenant defaults, legal action against bad tenants and legal liability, depending on the optional extras you add to your policy.

Having landlord insurance can give you peace of mind by providing you with financial protection against potential financial losses related to tenant issues, property damage and other unexpected events.

Landlord insurance is available in all states and territories, and it provides cover for landlords renting a property to tenants. You can get either landlord building insurance, landlord contents insurance or landlord combined insurance, Landlord insurance can provide cover for tenant-related issues such as malicious damage or rent default in addition to what building insurance covers.

Landlord insurance can provide financial protection for property owners in NSW from specific risks associated with renting out their property. There are three types of landlord insurance in you can choose from to cover your investment property in NSW:

Landlord building insurance

Landlord building cover protects the structure of your property, including garages or sheds on the property, if an insured event causes damage. However, landlord building insurance only covers structural damage to your property, not its contents. This insurance is ideal for owners primarily concerned with safeguarding the physical structures of their rental property.

Landlord contents insurance

Landlord contents insurance protects the contents you provide for tenant use, such as the furniture and furnishings you provide for tenants. Landlord contents insurance policies may cover the landlord’s assets, such as appliances, blinds and curtains, carpets and rugs, furniture and light fittings.

Landlord contents insurance is useful for landlords who furnish their rental houses and wish to safeguard their belongings. landlord contents insurance can be beneficial when the building is under a strata title and, as a result, covered by the strata title building’s policy.

Landlord property and contents insurance

Landlord building and contents insurance is a combination policy that provides complete coverage for the structure of your rental property and the items you provide for use to tenants. This policy is convenient for property investors, particularly those owning standalone homes, because it covers the building and the landlord’s contents in a single policy.

Landlord insurance covers a range of risks associated with renting out a property that standard building insurance does not.

While building insurance is essential for protecting the structure of your property against damage from insured events like fire, storms, and floods, landlord insurance also covers the unique risks associated with renting out your property.

Depending on your policy, some of the financial risks that landlord insurance may help protect you from include:

Loss of rental income

• Tenant default: If a tenant fails to pay rent, landlord insurance may compensate you for some or all of the lost income.
• Uninhabitable property: If your property becomes uninhabitable due to an insured event, landlord insurance may cover the rental income you lose while the property is being repaired.

Tenant-related risks

• Malicious damage by tenants: Landlord insurance can cover the cost of repairs if a tenant deliberately damages your property. Building insurance usually only covers accidental damage, not malicious acts caused by tenants.
• Theft by tenants: If tenants or guests steal the landlord’s items from the property, landlord contents insurance may cover the loss.

Legal liability

• Tenant injuries: Landlord insurance usually includes legal liability cover if you are legally responsible for an injury to a tenant or their guest on your property. Depending on your policy, you may be covered for some or all legal costs you incur, as well as any compensation you are required to pay to the injured party. Building insurance may offer some liability coverage, but it is often more general and not tailored to landlord-specific risks.

Legal expenses

• Eviction costs: If you need to evict a tenant due to non-payment of rent or other breaches of the tenancy agreement, landlord insurance may cover some or all of the legal costs associated with the eviction process.
• Pursuing unpaid rent: If you need to take legal action to recover unpaid rent, landlord insurance may cover the legal fees.

Reletting costs

• Reletting after a claim: Some landlord insurance policies may cover the costs of finding new tenants, such as advertising costs or letting agent fees, after you make a claim.

When purchasing landlord insurance, you can opt for optional extras to tailor your coverage. These extra covers address risks that might not be included in standard landlord insurance policies. Here are some common extra covers you may like to consider:

Accidental damage

This protects landlords against accidental damage caused by tenants or their guests, such as spills, breaks, or other unintentional harm to the property. While standard policies may cover repair for malicious damage, accidental damage is not always included.

Motor burnout cover

This covers the loss or damage to electric motors for appliances like a fridge supplied by the landlord if the motor is burnt out from an electric current or power surge.

Extended vacancy cover

This cover protects the property during extended periods of vacancy, covering risks like vandalism, theft, or damage. Standard policies may limit or exclude coverage if the property was vacant for more than a specified number of days, so this extension is beneficial if you anticipate prolonged vacancies.

Rent guarantee

This can help to ensure you receive a steady rental income even if the property is unoccupied for reasons not covered by standard loss of rent, such as market conditions. This provides financial stability by guaranteeing rent payments for a set period, even if the property is vacant.

Pet damage cover

This cover can protect you from damage caused by tenants’ pets, such as chewing, scratching, or soiling. With more tenants owning pets, this coverage might be useful to protect against pet-related damages that might otherwise not be covered.

Landlord insurance costs in NSW are influenced by multiple factors such as location, property characteristics, the level of coverage and your claims history.

Different insurance firms may charge different prices based on their risk assessments and policy terms. Some insurers also provide online discounts for a new policy or discount on your first year’s premium. This means getting landlord insurance quotes from different providers can help you get the best deal for your circumstances.

Some factors that insurance providers may look at when calculating your premiums include:

Location of the property:

Australians in suburbs with higher crime rates or more natural disasters generally face higher insurance premiums. Insurers also assess the likelihood of claims for theft, vandalism, and malicious damage. For example:

Sydney CBD: As an area with moderate crime rates, particularly for property-related crimes, premiums may be higher than in quieter suburban areas.¹

Western Sydney Suburbs (e.g., Mount Druitt, Blacktown): These areas generally report higher crime rates, particularly for property crimes like break-ins and vandalism. As a result, landlord insurance premiums in these areas may be significantly higher.

Northern Suburbs (e.g., Mosman, Chatswood: These are typically low-crime areas, which can lead to lower insurance premiums. The reduced risk of theft or vandalism makes these locations less costly to insure.

Blue Mountains: If you are located in the Blue Mountains, there is a higher possibility of natural disasters like bushfires or flooding, which can lead to a higher insurance premium. ²

Property characteristics

Building type and age: Older buildings or those constructed with materials more susceptible to damage (e.g. timber versus brick) may incur higher premiums.

Size and value of the property: Larger and more valuable properties generally cost more to insure because the potential cost of repairs or rebuilding is higher.

Security features: Properties with security measures such as alarms, security cameras, or secure fencing may have lower premiums because they have a reduced risk for theft or vandalism.

Sum insured

The overall amount of coverage you select for the insurance will affect your premium. A bigger sum insured results in higher rates because the insurer’s potential payout grows. You can use a home insurance calculator to estimate the value of your home and its contents before nominating an insured amount.

Landlord insurance can be a good idea for providing financial protection from various risks and covering structural and content-related issues related to your investment property. The best policy for you will depend on your financial situation, the type of property you own and the level of cover you require.

If you want an idea of how much your home insurance may cost, you can get a home insurance policy quote from our comparison service.

Always read the full details of your relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) to understand the specifics of your insurance products, including inclusions and exclusions, and to confirm that the policy meets your requirements.

Yes, landlord insurance is generally tax-deductible in NSW and across Australia. Landlord insurance is considered a cost of earning rental income, and as such, the premiums you pay for landlord insurance can usually be claimed as a tax deduction against your rental income.

While landlord insurance is tax-deductible, individual circumstances can vary. It’s a good idea to consult with a tax professional or accountant if you want to try to maximise your deductions in compliance with tax laws.

Yes, you should still consider having landlord insurance even if your property is in a building covered by strata insurance. Strata insurance covers the common areas and the building’s structure (e.g. roofs, walls, lifts, hallways) and is managed by the building’s corporation. It typically does not cover the contents of individual units, either the landlord’s or the tenants’ personal liabilities for owners or tenant-related risks.

Landlord insurance is specifically designed to protect your investment property and rental income. It covers risks not included in strata insurance, such as damage to the contents within your unit, loss of rental income and tenant-related risks.

While strata insurance provides essential coverage for the building and common areas, it does not address many of the risks associated with renting out your property. Landlord insurance can help to protect your financial investment in your unit and provide peace of mind when it comes to issues with tenants, your contents provided in the rental property and rental income.