Landlord insurance is specifically designed for people renting out their investment properties, whether it’s a unit or house. It can provide a level of financial protection from the impact of events like theft, damage, natural disasters and fires, but also loss caused by the actions of tenants and their guests, which a regular home and contents policy usually doesn’t cover.
Read on to learn the average cost of landlord insurance in Victoria, what you can be covered for and considerations when choosing a policy.
Victoria landlord insurance policies – houses
The following table displays a snapshot of landlord insurance policies for houses in Victoria, with links to providers’ websites.
Victoria landlord insurance policies – units
The following table displays a snapshot of landlord insurance policies for units in Victoria, with links to providers’ websites.
What does landlord insurance cost in Victoria?
Data from Canstar Research during the 2018 Landlord Insurance Star Ratings in July show that landlord insurance premiums have increased in the state of Victoria for houses, but have decreased for units. This is a welcome change from the previous year, where premiums rose by 18% for units while also increasing 21% for houses.
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.
Policy prices in Victoria are generally lower than a number of other states – for example, you’d pay roughly $200 more per year in New South Wales on average, and nearly $500 more in South Queensland.
What is the average rental price in Victoria?
To give you an idea of potential earnings per week from 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 Melbourne and not Victoria as a whole.
|Houses||MAR 2018||DEC 2017||MAR 2017||QOQ %||YOY %|
|Units||MAR 2018||DEC 2017||MAR 2017||QOQ %||YOY %|
While premiums can represent a relatively significant investment in regards to cost – Canstar Research shows the average annual insurance premiums eat up an average of 5.6% of rental income for houses and 1.4% for units – landlord insurance can be important as it could provide a level of protection from a wide range of events. Be aware that 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), insurance premiums are generally tax deductible because they’re considered an investment expense. Other landlord duties 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 of expenses you can claim as a landlord.
What does Victoria landlord insurance cover you for?
Landlord insurance policies are 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, some policies cover damage caused to physical property including:
- 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 insurance under your landlord insurance policy can provide a level of cover for contents that you own in the property from accidental, malicious and natural damage as listed above, as well as a level of cover from theft or burglary. Such items could include furniture, electronics and appliances.
How to get 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.
When comparing landlord insurance policies, some factors you may want to consider include:
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 windows 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 own furniture, appliances or even crockery within the property, you may wish to consider a more extensive building and contents policy. If you do not have any of your own possessions within the property, you may not need extensive contents cover, which could help reduce your premiums.
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 easier for you and insurers should you need to make a claim.
By comparing quotes from multiple providers, you can get a general idea of costs and level of cover you can expect. You can begin comparing with our comparison tables: