Do I Need Landlord Insurance If I Have Strata?

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If you’re a landlord with a property in a strata scheme, you’ve likely wondered about insurance, specifically whether strata insurance is enough to cover all your needs. It’s a fair question, and one we hear often from property owners across Australia. Strata insurance is a vital piece of the puzzle, but it doesn’t always cover everything a landlord might face, like tenant damage or loss of rental income. Let’s break it down so you can figure out what’s best for you.

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What Does Strata Insurance Actually Cover?

Strata insurance is designed to protect the collective interests of a strata scheme, think of it as a safety net for the building and shared areas. In Australia, it’s mandatory for strata properties, like units or townhouses, and typically includes:

• Damage to the building structure, such as walls, roofs, and floors, from events like fires, storms, or floods.
• Common areas, including stairwells, pools, or gardens, if something goes wrong.
• Public liability for incidents in shared spaces, say if someone trips in the hallway and sues.

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It’s solid coverage for the physical property, but here’s the catch: it’s focused on the building and communal bits, not your specific situation as a landlord. So, while it’s great for structural issues, it won’t step in for risks tied to renting out your unit.

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What Landlord Insurance Brings to the Table

Landlord insurance, on the other hand, is tailored to the unique challenges you face as a property owner leasing to tenants. It picks up where strata leaves off, offering protection for things like:

• Tenant-related damage, such as holes in walls or broken fixtures beyond normal wear and tear.
• Loss of rental income if your tenant stops paying or your property becomes uninhabitable after an insured event, like a burst pipe.
• Liability cover if a tenant or visitor gets injured inside your unit, not just in common areas.

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For example, imagine your tenant accidentally starts a small fire in the kitchen. Strata insurance might cover the structural repairs to the unit, but if your tenant skips rent for two months while it’s being fixed, or if your appliances need replacing, that’s where landlord insurance steps in.

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Do They Overlap?

There’s a bit of crossover, sure, especially around liability and building damage. Strata insurance already handles public liability in shared spaces, and it covers the building itself. But it’s not an either/or situation, it’s about filling the gaps. Strata won’t touch your personal contents, like curtains or carpets you’ve added, nor will it help if your tenant defaults on rent. Landlord insurance is like an extra layer, custom-built for your role as a landlord.

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So, Do You Need Both?

Here’s the short answer: it depends on what you’re worried about. If you’re happy relying on strata insurance for the building and don’t mind taking a chance on tenant risks, you might skip landlord insurance. But most landlords find the added peace of mind worth it, especially when you consider the cost of repairs or lost income.

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Let’s look at a real-world scenario. Say you own a unit in Sydney, and a tenant floods the bathroom, damaging your custom flooring. Strata insurance might cover the walls and plumbing, but your flooring and the weeks of rent you lose while it’s repaired? That’s on you, unless you’ve got landlord insurance. In Australia, where rental demand is high but tenant issues can crop up, that extra coverage can save you a lot of stress.

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What’s the Risk of Skipping Landlord Insurance?

Going without landlord insurance isn’t illegal, unlike strata, which is a legal requirement for owners’ corporations. But the risks can hit hard. Rental vacancies can fluctuate, and tenant disputes aren’t uncommon. If your tenant damages your property or stops paying rent, you could be out of pocket for thousands, with no recourse unless you’ve got a policy in place.

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Plus, there’s the liability angle. If someone gets hurt inside your unit, say a tenant’s guest slips on a wet floor, strata’s public liability won’t cover it. You could face legal costs or compensation claims, which landlord insurance can help manage.

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Making the Call

Deciding whether you need landlord insurance alongside strata comes down to your comfort level and your property’s specifics. Strata insurance, managed by the owners’ corporation, gives you a solid base, but it’s not designed with landlords in mind. If you want to safeguard your rental income, protect your contents, or cover tenant-related risks, landlord insurance is a smart addition.

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A good move is to check your strata policy details, usually available through your owners’ corporation, and see what’s included. Then, weigh that against what landlord insurance offers.

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Ultimately, it’s about peace of mind. Owning a rental property is a big investment, and having the right insurance means you’re ready for whatever comes your way, without sweating the small stuff.

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Disclaimer: The content provided in this blog is intended for general informational purposes only and should not be considered as professional advice. While we strive to provide accurate and up-to-date information, insurance is a complex field, and the applicability of the information can vary based on individual circumstances. Tank Insurance holds no responsibility for any actions taken based on the information provided in this blog.