Landlord insurance in the Northern Territory

From 2022 to 2023, house break-ins in the Northern Territory increased by almost 18%.² A landlord insurance policy may cover damages to the property caused by a break-in. If you have a furnished property covered by contents insurance, you may also be covered for stolen belongings (but not your tenants’ belongings as they need to purchase their own contents insurance policy).

Natural disasters such as cyclones and other severe weather are also common in the NT, but landlord insurance can cover these events too. You may also be covered for accidental or malicious damage to your investment property caused by your tenants.

What your landlord insurance covers will depend on whether you take out building cover, contents cover or a combination of both. Understanding exactly what’s included in your policy can help you with the claims process and give you peace of mind when unforeseen insured events occur.

A building insurance policy may cover the structure of the rental property, such as the walls, roof and fencing, while contents insurance will cover your belongings, including curtains, carpets and furniture. If you choose to purchase a combined policy, you may be covered for:

• Natural disasters and severe weather. This includes things like cyclones, storm surges and lightning.
• Fire. This covers both electrical fires and bushfires/grassfires.
• Legal liability. If you are liable for the death or injury to a person or damage to their belongings at the insured address, you may be covered for legal costs.
• Tenant damage and theft. This may include accidental damage cover, as well as cover for malicious acts and vandalism.
• Tenant default. Having rent default cover may cover your loss of rental income if your tenant is unable to pay.
• Removal of debris. Rather than just covering repairs, your insurer may also cover some of the clean-up.

Some of these inclusions may not always be included automatically and need to be purchased as an optional add-on to your policy. When comparing policies always remember to read the PDS to check whether a policy is right for you.

Other optional extras that you may be able to add to your policy include:

• Electric motor burnout cover. If you have appliances under a certain age (e.g. 10 years), you may be covered for the repair or replacement of any that burnout.
• Flood cover. Flooding isn’t always covered automatically. As certain parts of the Northern Territory may be vulnerable to floods, this add-on can help cover losses to your building or contents caused by flooding.

Exclusions are a part of every policy and understanding them can help you avoid getting caught out if you need to make a landlord insurance claim. Common exclusions may include:

• Wear and tear to the property. Typically, damage caused by general usage (e.g. worn carpets) is not considered an unexpected event and won’t be covered.
• Vermin, rodents and insects. If your rental property becomes infested, you may not be covered for damages or pest control. This is because the infestation may have been prevented by regular pest inspections and is therefore considered an unexpected event.
• Mould. Similar to vermin, mould is seen as a preventable loss and is typically not covered. If the mould is caused by an insured event (e.g. your house floods which causes a mould problem), you may be covered depending on your cover and insurer.
• Purchasing after a loss has occurred. Just as you typically can’t claim if you try to purchase a policy for an imminent threat to your policy, you won’t be able to claim for losses that occurred prior to you getting landlord insurance.
• Damage to tenant’s belongings. If you have contents policy, this will only cover the contents of the property owner. Your tenant will need to have their own contents policy to be covered for loss and damages caused by insured events.

Exclusions may not be the same across all insurers. Read the PDS to understand exactly what exclusions, limits and sub-limits your policy might have.

The cost of your landlord insurance premium is influenced by personal factors relating to your dwelling and external factors such as where the property is located. Your premium may be affected by:

• Natural disaster risks. If the area your rental property is in is prone to cyclones or is in a flood zone, for example, you may expect higher premiums.
• The area’s crime rate. If your property is in a high-crime rate area, it may be considered more high-risk which can increase your premium.
• Your rental property’s condition. The age and general condition of the property may affect how much you pay for cover.
• The sum insured. This is the amount you insure your building and contents for. Homes that are more expensive to rebuild or repair will incur higher insurance premiums.

Only strata insurance is compulsory in the Northern Territory if you have a unit, townhouse, complex or villa. This is paid by the body corporate. Getting building or contents cover for your rental property is completely up to you. However, it can protect your tenanted property against damages or loss caused by insured events. If a cyclone ripped the roof from your rental property tomorrow, could you afford the repair costs? If not, you may like to compare landlord insurance quotes today.