How Often Should You Review Rental Property Insurance?

Rental property insurance should generally be reviewed at least once a year and whenever something significant changes at the property or in the circumstances surrounding it.

For many landlords, insurance becomes something that is simply renewed each year. The renewal arrives, the premium is paid and the policy continues.

But an investment property does not necessarily remain the same from one year to the next. Renovations may have been completed. Rebuilding costs may have changed. Tenancy or occupancy arrangements can change. The insurer may also change policy terms, limits, exclusions or conditions.

That is why reviewing rental property insurance should be about more than comparing this year's premium with last year's.

The more important question is: does the cover you have still suit the property and your circumstances?

Why should landlords review their insurance each year?

An annual renewal provides a natural opportunity to look closely at the policy rather than simply allowing it to continue unchanged.

One important consideration is the building sum insured.

Construction and rebuilding costs can change over time. If the amount insured has remained largely unchanged for several years, it is worth considering whether it still appropriately reflects the cost of rebuilding the property. As Moneysmart points out, a property’s market value includes the land, while insurance is about the cost to rebuild, and those two figures can be very different.

Determining an appropriate sum insured is not the role of a property manager. Property owners should discuss the appropriate level of cover with their insurer, insurance broker or another appropriately qualified adviser.

The important point is not to assume that the settings that were appropriate when the policy was first arranged will necessarily remain appropriate indefinitely.

When else should you review your rental property insurance?

An annual review is a useful starting point, but there are other circumstances where an additional review may be appropriate.

After renovations or improvements

Renovating, extending or materially improving an investment property may change the property itself and potentially its rebuilding cost.

A new kitchen, extension, substantial refurbishment or other significant improvement may therefore be a reason to contact your insurer and determine whether anything needs to change.

It is better to ask the question than assume the existing policy automatically accounts for improvements made since it was arranged.

When tenancy or occupancy arrangements change

The way a rental property is occupied or rented may change during ownership.

If there is a material change to the property's occupancy or tenancy arrangements, owners should consider whether the insurer needs to be informed and whether the existing policy remains appropriate.

Exactly what needs to be disclosed will depend on the particular policy and circumstances, so the position should be confirmed directly with the insurer rather than assumed.

When the insurer changes the policy

Insurance products do not necessarily remain unchanged from year to year.

Terms, conditions, exclusions, limits and excesses can change. A renewal notice should therefore not automatically be interpreted as meaning every aspect of the policy is identical to the previous year.

Reading the renewal documents and asking questions about anything that is unclear can help property owners understand what they are actually renewing.

What should a landlord check when reviewing insurance?

A useful insurance review looks beyond the annual premium.

Property owners may want to ask whether the building sum insured still reflects current rebuilding costs, and whether renovations, additions or other material changes have been disclosed. It is also worth checking that the policy provides the landlord-related cover you expect, whether any exclusions, limits, conditions or excesses have changed, whether your circumstances or the way the property is occupied have changed, and whether there is anything else the insurer requires you to disclose.

There is no single answer that will be appropriate for every investment property.

The purpose of the review is to understand what you have, what it covers and whether anything has changed that should be discussed with your insurer or insurance adviser.

Is landlord insurance the same as building insurance?

Not necessarily.

Different insurance products can cover different risks, and their inclusions, exclusions, conditions, limits and excesses can vary.

For that reason, owners should not assume that having building insurance automatically provides every form of protection they might associate with owning a rental property.

Likewise, a policy providing landlord-related cover should not be assumed to cover every possible tenancy-related loss.

Understanding what is and is not covered requires reference to the individual policy and, where necessary, discussion with the insurer or insurance adviser.

Why does insurance matter for investment properties in Far North Queensland?

Insurance is relevant to investment property owners everywhere, but understanding your individual cover is particularly important when owning property in Far North Queensland.

The Cassowary Coast sits within the Wet Tropics, where substantial wet-season rainfall and tropical cyclones are established features of the regional climate.

That does not mean every property faces the same risks or that a particular type or level of insurance is appropriate for every owner.

It does mean that property owners in places such as Innisfail, Mission Beach, Tully and Cardwell have good reason to understand exactly what their policy covers, what it excludes and what conditions may apply.

The Australian Government’s cyclone reinsurance pool, run by the Australian Reinsurance Pool Corporation, is designed to reduce premiums for eligible properties with medium to high cyclone risk, including landlord policies. It does not guarantee a lower premium, because each insurer decides how any saving is passed on, but it is a reasonable question to ask at renewal.

The appropriate insurance response depends on the individual property and policy and should be discussed with the insurer, insurance broker or appropriately qualified adviser.

What does insurance have to do with property management?

Professional property management and insurance perform different roles, but both can form part of a broader approach to protecting an investment property.

Good property management can help owners stay informed about the condition and operation of their property through routine inspections, maintenance coordination, documentation and clear communication.

Insurance addresses a different category of risk.

Neither replaces the other.

At Leotta & Co, our approach to strategic property asset management looks beyond the immediate tenancy. The question is not simply whether rent is being collected and day-to-day issues are being handled. It is whether the decisions being made around the property support its condition, performance and protection over the longer term.

Insurance sits outside the professional scope of property management, but recognising when an owner may need to review it is part of thinking about the property as an asset rather than simply a tenancy.

Don't wait for a claim to understand your policy

The wrong time to discover that an insurance policy does not provide the protection you expected is after something has happened.

Making an insurance review part of your regular property planning gives you an opportunity to identify questions while there is still time to address them.

For many landlords, a practical approach is straightforward: review the policy at least annually and look at it again whenever there is a material change to the property or its circumstances.

Leotta & Co does not provide insurance or financial advice. Property owners should discuss their individual insurance requirements, appropriate levels of cover and policy terms with their insurer, insurance broker or appropriately qualified adviser.

Reviewing How Your Investment Property Is Protected?

An insurance review is a good moment to look at the bigger picture too: the property’s condition, its maintenance, its records and how it is being managed over the long term.

If you would like to see how we approach that for owners, read how we manage properties across the Cassowary Coast and hinterland, or request a rental appraisal for your property.

No pressure, and no obligation.

Frequently Asked Questions

How often should landlord insurance be reviewed?

As a general approach, rental property insurance should be reviewed at least annually and whenever there is a significant change to the property or its circumstances. The appropriate insurance arrangements will depend on the individual property, policy and owner's circumstances.

Should I review my insurance after renovating an investment property?

It is sensible to contact your insurer following material renovations, additions or improvements and ask whether the changes affect the policy, sum insured or any disclosure requirements.

Can my property manager tell me how much insurance I need?

A property manager can provide relevant factual information about the property where appropriate and encourage an owner to review their insurance, but determining suitable insurance cover is outside the role of property management. Owners should discuss their individual requirements with their insurer, insurance broker or appropriately qualified adviser.

Should I compare more than the insurance premium?

Yes. Price is only one consideration. Policy inclusions, exclusions, limits, conditions and excesses can also be important. The appropriate policy will depend on the owner's individual needs and circumstances.

Does landlord insurance cover every tenancy-related loss?

It should not be assumed that it does. Cover varies between insurers and policies and is subject to the relevant terms, conditions, limits, exclusions and excesses. Owners should check their individual policy.