Three kinds of cover
- Building insurance covers the structure: walls, roof, fixed kitchens and bathrooms, fences and sheds, against events such as fire, storm and (if included) flood. Your lender will usually require it from settlement.
- Landlord insurance adds cover for risks that come with having a tenant. Some insurers sell it as a combined building and landlord policy, others as an add-on.
- Contents insurance for a rental covers the items you own inside it: carpets, blinds, light fittings and, if furnished, the furniture. The tenant's own belongings are their responsibility.
A standard owner-occupier home policy may not cover a property while it's rented. Tell the insurer it's a rental, or you risk a refused claim.
What landlord policies typically cover
Policies differ, but the common inclusions are:
- Loss of rent if the house can't be lived in after an insured event, such as a fire.
- Malicious damage or vandalism by the tenant or their guests.
- Tenant default, when a tenant stops paying or leaves without notice, usually after the bond is used and up to a set number of weeks.
- Legal liability if someone is injured at the property and you're found responsible.
- Accidental damage on some higher-tier policies.
Common exclusions
- Wear and tear, gradual deterioration and lack of maintenance.
- Damage before the policy started, or that you knew about.
- Unapproved tenancies, such as a property let without a written lease, or a failure to follow tenancy law or the policy's screening conditions.
- Pets damage, unless specifically covered.
- Flood, if you opted out or the policy doesn't include it.
- The first 72 hours after a policy starts, for flood or storm, under some policies.
Limits and excesses vary a lot, especially for tenant default and loss of rent. Compare the Product Disclosure Statements side by side, not just the premiums.
Flood cover and high-risk areas
Most home policies use a standard definition of flood: water escaping from the normal confines of a river, creek, lake, dam, canal or reservoir. Not every policy includes it, and opting out can also remove cover for related events such as rainwater run-off and storm surge.
In the highest-risk areas, flood cover can be very expensive or hard to get. The Insurance Council of Australia estimates that about 80% of homes at severe to extreme flood risk don't have flood cover, largely because of cost. In parts of the federal electorate of Macquarie (the Hawkesbury and Blue Mountains in NSW), the local MP has reported flood cover quotes of $10,000 to $30,000 a year. Analysis by the Australian Reinsurance Pool Corporation in 2026 found flood take-up on homes across northern Australia falls to about a third in extreme-risk areas.
That's why we screen for flood and other hazards at the suburb, pocket and property level before recommending a house, and why getting an insurance quote is part of due diligence, not something to do after exchange. A cheap house with an uninsurable flood risk isn't cheap. Our due diligence checklist includes this step.
When cover must start
Who bears the risk between signing and settlement depends on the state and on the contract. Under the standard contracts commonly used, as at October 2026:
| State | Risk generally passes to the buyer |
|---|---|
| NSW | At settlement, or earlier if the buyer takes possession |
| VIC | At settlement (or earlier possession) |
| QLD | 5pm on the first business day after the contract date |
| SA | When the contract is signed |
In Queensland and South Australia that can mean weeks of exposure before you own the house. Arrange a policy (or at least a cover note) to start on the right date. Your contract can change these defaults, so confirm the date with your solicitor or conveyancer before you sign.
Claims tips
- Photograph everything at the start of each tenancy. A good entry condition report from your property manager is your best evidence.
- Keep receipts for improvements and new items.
- Notify the insurer early and get consent before repairs, other than urgent work to stop further damage.
- Keep rent records and tribunal orders, which tenant default claims usually require.
- Ask for reasons in writing if a claim is refused. The Australian Financial Complaints Authority handles disputes that can't be resolved with the insurer.
Premiums are generally a deductible rental expense, which your accountant can confirm. They are still a real weekly cost, so include them when you run the holding cost in our calculators.
Sources
- CHU Underwriting Agencies, "What does Landlord Insurance cover me for?", accessed October 2026
- Financial Rights Legal Centre, "Flood insurance" fact sheet, updated March 2025
- Insurance News, "Nation 'cannot ignore' flood threat to 1.3 million properties" (Insurance Council of Australia estimate), March 2026
- Insurance News, "Flood cover gap blows out in highest risk areas, cyclone pool finds" (ARPC analysis), August 2026
- Suncorp, "Do you need insurance before settlement?", December 2019
- Mondaq, "NSW flooding: what rights are you entitled to if the property has been damaged prior to settlement" (Conveyancing Act 1919 s 66K), March 2022
- Spot On Conveyancing, "Who is responsible for insurance in a Queensland property sale", December 2025
- Legal Services Commission of SA, Law Handbook, "Insurance risk", accessed October 2026
General information only. Nothing on this site takes into account your objectives, financial situation or needs, and it is not financial, credit, tax or legal advice. Past performance is not a reliable guide to future performance.