Is Your Landlord Insurance Actually Covering You?
Most investors set and forget their landlord insurance. Here's why an annual review could save you from a very expensive surprise.
Landlord insurance is one of those policies most investors take out when they buy a property and never look at again. The premium renews, the direct debit runs, and everyone assumes they're covered. The problem is that properties change, policies change, and insurers quietly adjust what's included. Here's what to review every year.
What Landlord Insurance Actually Covers
A comprehensive landlord insurance policy typically includes: building insurance (damage to the structure), landlord contents insurance (carpets, window furnishings), loss of rental income if the property becomes uninhabitable, tenant default cover for unpaid rent up to a set limit, and public liability. Not all policies include all of these — cheaper policies often exclude tenant default or limit loss-of-rent coverage to a short window.
Common Coverage Gaps
- Sum insured that hasn't kept up with construction cost inflation — rebuilding costs have risen 30–40% in some states since 2020
- Tenant damage exclusions with high excesses or low sub-limits
- No coverage for malicious damage by tenants who are still in occupancy
- Loss of rent only covered if the property is physically damaged — not if the tenant simply stops paying
- Short-stay rental (Airbnb) voids standard landlord policy coverage
The Sum Insured Problem
The most common and most costly gap is an inadequate sum insured. Building insurance should cover the full cost of rebuilding the property from scratch — not the market value. In a rising construction cost environment, a sum insured set three years ago may be significantly below what it would cost to rebuild today. Most insurers offer an inflation-adjusted sum insured if you ask; many policies include automatic indexation — check yours.