Landlord insurance is a type of insurance designed for people renting out their investment properties, whether a unit or a house. Finding a suitable landlord insurance policy can provide a level of protection financially from a range of events such as theft, fire and natural disasters, as well as loss caused by your tenants or their guests.
Here we look into the average cost of landlord insurance in New South Wales, what you can be covered for and some considerations when comparing policies.
NSW landlord insurance policies – houses
The following table displays a snapshot of landlord insurance policies for houses in New South Wales, with links to providers’ websites.
NSW landlord insurance policies – units
The following table displays a snapshot of landlord insurance policies for units in New South Wales, with links to providers’ websites.
What does landlord insurance cost in NSW?
Data from Canstar Research during the 2018 Landlord Insurance Star Ratings in July shows landlord insurance premiums increased in the state of New South Wales since this time last year, for both units and houses. This continued the trend from 2016-17, where premiums for units and houses rose by 5% and 16% respectively.
Average Premiums – 2017 vs 2018
|Dwelling||2017 Average market Premium||2018 Average market Premium||
Change in Market Premiums
Source: www.canstar.com.au. Quotes obtained for Allianz, Coles, NRMA, QBE, SGIC, SGIO and Suncorp. Premiums are annual premiums based on $450,000 building cover and $25,000 contents cover for a house, and $25,000 contents cover for a unit or townhouse, with a target excess of $500 (with $600 used when $500 is unavailable) at all addresses considered within each state/region included in the Canstar Landlord Insurance Star Ratings in 2017 and 2018.
What is the average rental price in NSW?
To give you an idea of what you could potentially earn per week from your tenants, Domain’s State of the Market Report for March 2018 showed the average rent for both houses and units in capital cities. Note this data only includes Sydney and not New South Wales as a whole.
|Houses||MAR 2018||DEC 2017||MAR 2017||QOQ %||YOY %|
|Units||MAR 2018||DEC 2017||MAR 2017||QOQ %||YOY %|
You can see in the tables above that rental prices remained relatively stagnant, with units experiencing a slight increase in price. Based on Canstar’s figures on the average price of landlord insurance, buying an insurance policy will cost the average landlord in New South Wales 5.2% of their annual rental income for a house and 1.4% of their rental income for a unit or townhouse.
So landlord insurance can be a fairly significant investment in regards to cost, and in the case of New South Wales, premiums have risen by a higher amount than any other state for both types of dwellings.
It can be very important for landlords, however, as it provides a certain level of protection (we’ll go into further detail on this further down). Be aware these premiums can change depending on a number of factors, such as the safety of your property’s neighbourhood, the local crime rate and the actual value of the house.
The good news for landlords is that according to the Australian Taxation Office (ATO), your insurance premiums will generally be tax deductible because they’re considered an investment expense. Other landlord costs that can potentially be tax deductible include:
- Fees for property managers
- Advertising for tenants
- Travel undertaken to inspect the property
- Pest control
The ATO has an in-depth list on expenses you can claim as a landlord.
What does NSW landlord insurance cover you for?
Landlord insurance is generally designed to provide a level of protection from the following events:
- Loss of rental income
- Damage to your building (home or unit)
- Damage to your contents (possessions in the home that you own)
Loss of rental income
Under a standard landlord insurance policy, you could be covered for some level of rental income loss. Common insured events include income loss due to:
- A tenant moving out without providing prior notice (absconding tenants)
- Tenants failing to pay their rent (defaulting tenants) or failing to vacate the property in time
- The death of a tenant
- A tenant being released from their lease due to financial hardship
- A tenant being unable to access the property for various reasons (such as damage to surrounding properties)
- The property being left in an unlivable condition due to either an insured event or damage caused by the tenant
Damage to buildings
Depending on your level of cover, your physical property itself can be covered for damage caused by some of the following:
- Damage caused by tenant’s pet
- Insured natural disasters (floods, fires, storms, earthquakes and more – check your PDS)
- Malicious and intentional damage caused by tenant to building
- Accidental damage caused by tenants or their guests
- Scorching and water damage
Damage to contents
Additional contents only insurance under your landlord insurance policy can provide a level of protection for the contents you own in the property from accidental, malicious and natural damage as listed above, as well as giving you a level of cover from theft or burglary. Such items could include furniture, electronics and appliances.
How to look for the best value landlord insurance
As a landlord, you are liable for your property and the belongings you own inside it, so it is a good idea to take care when choosing a policy to protect you.
When comparing landlord insurance policies, there are a number of things worth consideration, including:
What coverage do you need?
Do you need both building and contents cover, or just building cover? Keep in mind that sometimes items like carpets and window are covered by a contents policy but not a building policy, so you need to check with the insurance company to make sure you have the right type and level of cover for your needs.
If you do not have and of your own furniture or possessions within the property, you may not need an extensive contents policy, which could help reduce your premiums. On the other hand, if you’ve filled the house with furniture, appliances or even crockery, you may wish to consider a more extensive policy.
Check the extra benefits on offer
Policies vary in the range of benefits offered; some might be covered automatically under a standard policy, while for others you may need to add them in by request. Depending on what you’re after, you may consider whether you would benefit from a policy that offers extras such as the replacement of locks, the removal of a tenant’s leftover possessions, legal expenses, the cost of evicting a tenant and more.
Check the exclusions too
Policies generally come with a number of exclusions. Commonly cited exclusions within landlord insurance policies include:
- If you’ve breached the lease agreement in any way
- If the property is seized lawfully
- Intentional acts of damage committed by you or with your consent
- Water damage due to an opening made during a renovation or extension
You can find the complete list of exclusions within a policy’s product disclosure statement (PDS).
Are pets (and their associated damage) covered?
While it’s obvious to think of reasons to not allow furry companions in your lease, you might want to consider the fact that according to a study America, 63% of landlords who were concerned about pets never actually experienced any first-hand issues, while those that did generally found the damage was worth “far less than the average rent or the average pet deposit”.
Furthermore, allowing pets could broaden your prospective tenancy pool, and according to the RSPCA, pet owners tend to be more willing to pay extra for the ability to bring their pets to a rental, are more responsible and are more likely to stay longer.
If your property allows pets, it may be worth looking for a policy that covers pet damage.
As well as checking for these things before taking out a policy, there are a number of steps you can take to reduce the risk of something going wrong with your investment property. Things like conducting regular inspections, keeping regular and detailed reports and having a signed agreement with your tenants can make things a lot easier for you and insurers when the time comes to make a claim.
By comparing quotes from multiple providers, you can get an idea of the general coverage and average costs you can expect. You can compare landlord insurance with Canstar using the comparison tables: