Landlord Insurance vs. Home, Building and Contents Insurance: Which One is Right for You?

Insurance is important because it protects you and your family from financial difficulty. It reduces financial stress and allows you to focus on recovering from loss instead of worrying about finances. Peace of mind that you’re covered financially in case something happens.

When it comes to protecting your property, whether it’s your family home or a rental investment, knowing the differences between landlord, home, building, and contents insurance can make a significant impact on your financial security. 

Let’s delve into the heart of these insurance policies to help you make an informed decision and discover the best options for your situation.

What is landlord insurance?

Landlord insurance is a type of insurance that is designed to protect landlords from the financial risks associated with renting out their property. This type of insurance can cover a wide range of risks, including:

  • Damage to the property caused by tenants or their guests
  • Loss of rent if a tenant defaults on their payments
  • Legal fees associated with evicting a tenant
  • Claims from third parties for injuries or damage caused by tenants

Does landlord insurance cover building?

Yes, most landlord insurance policies cover the building structure, like home insurance does. However, it also covers unique risks associated with rental properties, such as tenant damage or loss of rental income.

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What is home, building and contents insurance?

Home, building and contents insurance is a type of insurance that is designed to protect homeowners from the financial risks associated with owning a home. This type of insurance can cover a wide range of risks, including:

  • Damage to the property caused by fire, flood, storm, or other natural disasters
  • Theft of the property’s contents
  • Liability for injuries or damage caused to others by the property

Building insurance explained

Building insurance, also known as home insurance or property insurance, is a type of insurance policy that provides coverage for the physical structure of a property. It is typically purchased by homeowners to protect their investment in the building and safeguard against potential financial losses due to damage or destruction.

Here are some key aspects of building insurance:

  • Structure coverage: Building insurance primarily focuses on protecting the physical structure of the property, including the walls, roof, floors, windows, doors, and permanent fixtures. It provides coverage against various perils, such as fire, lightning, storms, explosions, vandalism, theft, or malicious damage.
  • Rebuilding or repair costs: Building insurance policies often cover the costs associated with repairing or rebuilding the property in the event of damage or destruction. The coverage amount is typically based on the estimated rebuilding cost of the property, which may differ from its market value.
  • Additional structures: In addition to the main building, building insurance may also cover other structures on the property, such as garages, sheds, fences, or driveways. However, the extent of coverage for these additional structures may vary among insurance policies, so it’s important to review the terms and conditions.
  • Exclusions: Building insurance policies typically have certain exclusions, such as damage caused by normal wear and tear, gradual deterioration, or certain natural disasters like earthquakes or floods. These perils may require additional coverage or separate insurance policies, depending on the location and specific risks involved.
  • Liability coverage: Many building insurance policies include liability coverage, which protects homeowners from legal expenses and damages if someone gets injured on their property and holds them responsible for the injury.
  • Optional extras: Building insurance policies often offer optional extras that can be added for an additional premium. These may include coverage for accidental damage, home emergency assistance, alternative accommodation if the property becomes uninhabitable, or legal expenses related to disputes.

Content insurance explained

Contents insurance, also known as personal property insurance, is a type of insurance policy that provides coverage for the belongings and personal possessions inside a property. It is typically purchased by homeowners or renters to protect their valuable items against risks such as theft, damage, or loss.

Here are some key aspects of contents insurance:

  • Belongings coverage: Contents insurance covers a wide range of personal belongings, including furniture, appliances, electronics, clothing, jewelry, artwork, and other valuable items. It offers protection against risks like fire, theft, vandalism, accidental damage, and natural disasters.
  • Replacement cost or actual cash value: Contents insurance policies may provide coverage based on either the replacement cost or actual cash value of the items. Replacement cost coverage pays for the cost of replacing the damaged or stolen items with new ones of similar kind and quality, while actual cash value coverage takes depreciation into account and reimburses based on the current value of the items.
  • Limits and coverage extensions: Contents insurance policies often have coverage limits for certain categories of belongings, such as high-value items like jewelry or artwork. However, policyholders can usually extend coverage for specific items by adding riders or endorsements to the policy. These extensions provide higher coverage limits or additional protection for valuable possessions.
  • Worldwide coverage: Contents insurance typically provides coverage for belongings not only inside the insured property but also outside, such as when traveling or temporarily moving items to a different location. This worldwide coverage ensures that personal belongings are protected wherever they are.
  • Exclusions and deductibles: Like any insurance policy, contents insurance may have certain exclusions and deductibles. Common exclusions include damage caused by normal wear and tear, intentional acts, or specific perils like earthquakes or floods. Deductibles are the amount policyholders are responsible for paying out of pocket before the insurance coverage kicks in.
  • Liability coverage: Some contents insurance policies may also include liability coverage, which protects the policyholder if they are held legally responsible for injuries sustained by others on their property or caused by their personal belongings.
  • Optional extras: Contents insurance policies often offer optional extras that can be added for an additional premium. These may include coverage for accidental damage to belongings, coverage for items taken outside the home (e.g., laptops, smartphones), or coverage for specific risks like water damage or pet-related incidents.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

What is the difference between landlord insurance and home, building and contents insurance?

The main difference between landlord insurance and home, building and contents insurance is that landlord insurance covers the specific risks associated with renting out a property, such as damage caused by tenants or loss of rent. Home, building and contents insurance, on the other hand, is designed to cover the risks associated with owning a home, such as damage caused by natural disasters or theft.

Here are the key differences between landlord insurance and home, building and contents insurance:

Who is covered?

Landlord insurance covers landlords and their properties, while home, building and contents insurance covers homeowners and their properties.

What is covered?

Landlord insurance covers a wider range of risks than home, building and contents insurance, including loss of rent, damage caused by tenants, and legal fees.

The cost?

Landlord insurance is typically more expensive than home, building and contents insurance.

If you are a landlord, you should consider getting landlord insurance. This will help protect you financially in the event of a loss. If you are a homeowner, you may want to consider getting home, building and contents insurance. This will help protect you financially in the event of a loss to your property or its contents.

Ready to invest in your future?

Deciding to become a landlord is a significant step, and understanding the various types of insurance available is only the beginning. You also need a trusted partner to help you navigate the complexities of property financing.

Whether you’re purchasing your first investment property or expanding your property portfolio, we’re here to guide you every step of the way. As Australia’s leading mortgage brokerage firm for Australian expats and foreign buyers, we can offer you bespoke mortgage solutions tailored to your unique needs.

Reach out to Odin Mortgage today for a free, no-obligation consultation and let us help you make informed decisions that align with your financial goals.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently asked questions

Building insurance covers the physical structure of your home, including permanent fixtures and fittings, and external structures like garages and sheds. It typically protects against damages caused by events such as fires, storms, and natural disasters.

If you own an apartment, it’s recommended to have home insurance to protect your investment. Typically, a strata corporation will have a building insurance, but it might not cover everything within your apartment. Check with your strata corporation and consider a contents insurance policy to cover personal belongings inside your unit.

If you’re a landlord, it’s highly recommended to have both. Building insurance covers the physical property, while landlord insurance covers tenant-related risks, such as loss of rental income, legal expenses, and damages caused by tenants.

Home insurance typically covers the physical structure of your home, while contents insurance covers your personal belongings inside the home. This can include furniture, appliances, clothing, and more.

If you’re renting out a property, it’s strongly recommended to have landlord insurance. It provides cover for unique risks associated with rental properties, such as tenant damage and loss of rental income.

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