If you’re thinking about renting out your investment property, you might be wondering about the cost of landlord insurance. We’ll break down how landlord insurance works, explore the average costs in different parts of Australia, and discuss the factors influencing these costs.

Over the past few years, Australia has faced economic challenges due to COVID-19 and severe weather events causing floods along the East Coast. Some insurance providers, especially those offering landlord insurance, have been impacted by these economic changes.

During the pandemic, many landlord insurance providers temporarily stopped offering coverage or declined new customers. About 80% of Australian landlord insurance providers left the industry, and those who remained often imposed stricter conditions. Some providers even removed coverage for loss of rent, and others adjusted their claim limits. Additionally, premium prices have increased compared to pre-COVID levels.

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What is the Average Cost of Australian Landlord Insurance in 2023?

So, what can you anticipate in terms of landlord insurance costs in 2023, and what factors contribute to these prices?

To determine the average cost of landlord insurance nationwide, Canstar’s expert research team analyzed data for each state or territory, including separate calculations for North Queensland (areas north of Rockhampton). The figures below consider the average annual insurance premium for both houses and apartments:

Average annual Australian landlord insurance premiums – 2023

State or territory Houses Units
NSW $2,056 $391
VIC $1,769 $347
North QLD* $5,159 $647
QLD $1,957 $341
SA $1,544 $324
WA $1,702 $373
TAS $1,585 $319
NT $3,419 $606
Source – Canstar.com.au
*North QLD is defined as the portion of Queensland north of, but not including, Rockhampton

What Factors Influence the Cost of Landlord Insurance?

Landlord insurance provides coverage for various situations, such as property damage, content damage, and loss of rent. The extent of coverage varies depending on the insurance provider you select. Loss of rent coverage, for example, may not be automatically included in all policies, and you might need to add it separately, potentially increasing your premiums.

Several factors can impact the cost of your landlord insurance premiums, including:

  1. Local Crime Rate: If your investment property is in an area known for a higher risk of burglary or other crimes, your premiums may be higher.
  2. Rental Price: The amount you charge for rent matters. Higher rent rates might lead to higher premiums, as landlord insurance can cover you for loss of rent.
  3. Replacement Cost of Belongings: Insurance providers consider the replacement cost of items like furniture, carpets, and blinds, as well as the rebuilding cost when determining premiums.
  4. Risk of Extreme Weather: Properties in areas prone to weather events like floods and bushfires may incur higher premiums for landlord insurance.
  5. Coverage Level and Excess: The extent of coverage you choose affects premiums. While more comprehensive coverage typically results in higher premiums, opting for a higher excess (the amount paid before insurance kicks in) can lower your premiums.
  6. Number of Properties Insured: Some providers offer discounts for insuring multiple properties. If you have more than one property, you might save on premiums with a multi-policy discount, depending on your provider.

Is Landlord Insurance Mandatory?

While there’s no legal obligation to have landlord insurance in Australia, it’s often a requirement from mortgage lenders as part of your home loan conditions. According to the Real Estate Institute of New South Wales (REINSW), having landlord insurance is considered “standard industry best practice.” Many property management teams also insist on landlords having insurance before taking on a property.

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How Can You Save on Landlord Insurance?

If you’re concerned about the cost of landlord insurance and want to lower your premiums, there are some strategies you can consider. One option is to review the excess on your policy, and another is to explore potential tax deductions.

Review your excess

The excess is the amount you must pay out of pocket when making a claim. A lower excess typically results in higher premiums, and vice versa. Increasing your excess could reduce your premiums, but keep in mind that you’ll need to pay more upfront in the event of a claim.

Explore tax deductions

According to the Australian Tax Office (ATO), property investors may be eligible for deductions on various expenses related to renting out a property, including those for maintenance and management. Consult a qualified accountant to determine if your landlord insurance premiums qualify for deductions and if you’re eligible for potential tax relief.

In Conclusion

While landlord insurance is not legally mandatory in Australia, it is often a requirement by mortgage lenders and is widely considered a standard practice within the industry. Many property management teams also insist on landlords having insurance before taking on a property.

If the cost of landlord insurance is a concern, there are practical ways to save on premiums. Reviewing the excess on your policy and exploring potential tax deductions can be effective strategies. It’s essential to strike a balance between cost savings and ensuring adequate coverage for your investment property. Before making any decisions, it’s advisable to consult with professionals, such as your mortgage lender or a qualified accountant, to ensure that your insurance choices align with your financial goals and legal obligations.

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