Landlord Insurance

Our guide to insurance if you own and rent out a residential property

Updated May 2018
Review Summary of Landlord Insurance
  • Landlord Insurance is a superior type of home insurance policy which is tailored specifically for landlords and usually replaces the need for general home/contents policies.  Occasionally, insurers will offer landlord insurance as a "bolt on" to their range of home insurance policies. 
  • Landlord insurance protects a rental beyond standard home insurance and covers your investment property for damage and loss of rental due to events outside of your control.
  • Landlord insurance is the only form of financial protection for issues arising with your tenants, but policies vary so it's important to know what you will and won't be covered for. 
  • Only your property and contents are covered by landlord insurance, not your tenant’s personal property - this is often misunderstood. 
  • The landlord insurance policies we researched range in value and cover - we believe an insurance broker is useful to navigate the options and ensure you get the right cover for your specific location and property type, but not all insurance companies work with brokers so the policies offered may be limited. 
  • To ensure landlord insurance is valid, you will need to reference-check and take a bond from your tenants
  • We found the average best price was around $1,000-$1,100 per year for a standard 3-4 bedroom house with a replacement value of between $300,000 and $450,000. 
  • Cover like loss of rent is usually capped at around $20,000 or 12 months. This may sound like a lot, but situations like the Christchurch earthquakes have proven that homes took much longer to repair before they could be tenanted again. 
  • If you are in Wellington, the 2016 earthquake has increased policy costs and at least one insurer will no longer take on new clients. Most insurers have implemented an internal policy of assessing properties in the 5000-9000 postcode range, with a focus on Wellington, Christchurch and Kaikoura. Properties in these areas tend to require the assistance of an underwriting team and an investigation into any previous claim(s) made. 
If you're one of New Zealand’s 500,000 rental property owners, landlord insurance is worth considering if you are renting your investment to tenants. While landlord insurance is not required in order to rent a property (home insurance covers the replacement value of your property), many of the policy benefits can prove very useful if you run into trouble with tenants or there is an unforeseen event.

Frequent media reports make it known that methamphetamine contamination can destroy a property’s rental and resale potential, but instances of intentional and accidental damage are far more common.  Most landlords have no idea what they are covered for and are either overpaying for insurance they don’t need or exposing themselves to a big risk by under-insuring. 

In this guide we list a number of tips to help you decide if landlord insurance is the right choice for your property. We outline landlord insurance covers and its limitations. 

Our Guide: Overview
Know This - The Meth Question
  1. When reviewing the T&Cs of the policies we sampled, only Initio provided full cover for methamphetamine manufacture - other policies only cover damage caused by fire or explosion from a methamphetamine lab.
  2. Claims are usually limited to $30,000 - recent media reports suggest methamphetamine contamination can cost the property owner well over $30,000, especially when wall linings and ceiling strip outs are required.
  3. In some instances, the Law Society recently claims that full demolition may be required - in a recent media story, a Hamilton property was demolished and rebuilt at a cost of around $250,000.

Landlord Insurance – the basics

Landlord insurance is not compulsory, nor is it a legal requirement

If you are renting a residential property, general home and contents insurance will cover the value of your property for events like fires or earthquakes. Landlord insurance covers you for events like intentional damage to the property and/or its contents, as well as non-payment of rent or lost rental due to property damage. If you rent to what some people consider higher risk tenants (for example, students or beneficiaries) then you may find landlord insurance more beneficial compared to a situation where you rent to a mature, professional couple.
​

A landlord insurance policy provides more coverage than the standard home and contents policies

Landlord insurance cover does range between providers, so it’s essential to check the terms and conditions in detail. Generally, the more coverage, the higher the cost. Standard cover usually includes:
  • Loss of rent - payment of rental income for a specified time if your property is unsafe to rent after a covered event
  • Furnishings - cover for damage to furniture and furnishings provided to the tenant
  • Theft, Fire, Earthquake, Explosion, Storm, Flood etc - cover to replace or repair your property should such an event occur
  • Malicious, intentional damage by tenants – this can occur if there is an eviction, or in the process of an eviction
  • Intentional damage by anyone NOT living at the property can be covered, but not always
  • Legal liability & reparation - cover for any damage caused by your property to a third party
  • Emergency repairs and locks and keys - cover to repair your property and/or replace locks and keys
  • Methamphetamine contamination – cover to repair your property if it is used as a Meth lab.

Every policy differs; don't assume you'll be covered without reading the fine print.
​

Be aware of what’s not covered

Not all policies are the same, and it’s essential to know the fine print before taking out a policy. Some policies will cover unpaid rent, others will argue that it’s a “payment risk” best managed by you so they won’t pay out.

Furthermore, “gradual damage” may be excluded which means that if a tenant never tells you about a leaking pipe and it causes damage over time, you could be uninsured. “Wear and tear” is also likely to be excluded, meaning upgrading wooden windows to aluminium because of rot won’t be covered. And a tenant who moves out and leaves a mess may not constitute “damage” so you won’t be able to claim.

​Landlord insurance is not straight forward at all, so you'll need to understand your policy to make the best choice. For this reason, consulting with an insurance broker is a popular option to pick the right policy for your needs. 
​

Professional membership in the New Zealand Property Investors' Federation (NZPIF), renting it through a real estate agent and/or being a member of any local landlord association does not provide cover

Such memberships may require a fee but offer no protection should something go wrong with your property. Landlord insurance is the only form of financial protection that can compensate you for issues arising with your tenants and/or general loss. 
​

If your property is furnished with valuable assets, landlord insurance MAY be an essential expense

If you have valuable whiteware and/or furniture you’d like to protect from theft or damage, getting landlord insurance that specifically covers contents cover is probably in your interests. Of course how much cover you will need depends on the quality of what you’re insuring. Likewise, if you have cheap contents that you could replace for next to nothing, it may not be worth insuring. 
​

Your tenants' contents won't be covered by landlord insurance

Only your property and contents are covered by landlord insurance, not your tenant’s personal property. So, if someone breaks in and steals your tenant’s phone and TV, unless they have their own contents insurance, they are not covered. Make sure to tell your tenants this so there is no misunderstanding should something unfortunate happen. 
​

You’ll need house insurance to get a mortgage for your investment property

To get a mortgage for your rental property, the lender will require you have insurance on the property to cover its value. Standard home insurance will provide this, but if you’re wanting further protection so you won’t be exposed if and when something unfortunate occurs (as mentioned above), landlord insurance will be the only policy you need.

​Even if you don’t have a mortgage on the investment property, some form of insurance over the property is recommended – landlord insurance covers all the basis for the duration of your investment. 
​

Converted a family home to a rental property? You will need to arrange new insurance

This is quite common all over New Zealand. The situation arises when someone inherits a property and decides to rent it out, and when someone moves in to their partner’s home and decides to rent out their existing home. You’ll need to notify your lender if there is a mortgage on it, but most importantly, you’ll need the right insurance to cover the actions of tenants. Without it, any claim on your existing home and contents insurance would be invalid given you are not living in the property.
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The process is easy:
  • Insurers will quote you for a home and contents policy that covers tenants.
  • The price will be higher than your existing insurance owing to the higher risk.
  • But this cover won’t be landlord insurance, which further protects you from loss of rent and damage by tenants specifically outlined above.
  • You’ll need landlord insurance for that, and we suggest finding the best quote by doing a comparison using our best buys and step-by-step guide below.
​

What information do I need to provide to an insurer to get a quote?

The insurer and/or an insurance broker will need to know a few details before being able to quote. The process is simple, and requires entering basic information about the property and providing some simple numbers and dates.

​You’ll be asked the following key questions in most situations:
  • Address of property
  • Type of property (house, apartment, granny flat etc)
  • Materials used to build property and materials used on the roof
  • Number of self-contained units on the property
  • Year the property was built
  • Floor area of property
  • Levels of property
  • Whether it’s a member of a body corporate
  • Who you rent the house to (i.e. to tenants, family, employees or as a holiday home)
  • Burglar alarm monitored – if you have this, it will likely reduce your insurance premium
  • The sum you want insured, i.e. the replacement cost – this is really important not to undervalue if your property needs to be replaced.

Replacement Cost Estimates - What to Know
  1. A useful tool we suggest for a basic estimate is the Cordell Sum Sure Calculator – just enter your address for up to date price, and provide specific details to suit your situation.
  2. It's important to know that calculating the replacement cost is not without its risks. Building material costs in New Zealand are at an all-time high and the cover you select may not rebuild it to the same "standard".
  3. Also, you don't know the scenario in which it will need to be replaced - different events will mean different costs. For example, your house burning down will be cheaper to replace than if it is in an earthquake which invariably has led to a shortage of local labour and materials therefore driving up the replacement costs.

Important things to know:
  • Most insurers will limit your cover to fire, lightning, explosion, storm, flood and natural disaster if your property is unoccupied after 30 to 60 days.
  • If you want extra coverage, you’ll need to buy it separately. If you want to do a renovation in between tenants, you’ll be covered for any damage caused by a break in as long as it occurs before 30 or 60 days (check your policy). ​
​

In many situations, an insurance broker will know best

The landlord insurance policies available are a mixed bag, and no one wants to be caught out by loopholes and tricky exclusions. A broker will look at every risk rather than just “big risks” such as fire and flooding.

​Best of all, a broker won’t cost you any more - brokers get paid a commission by the insurance companies they work with and if you need to make a claim they can assist you to make sure you present your best case. 
​

Some policies are “bolt-on” to home insurance, meaning they cover rental property-specific events

Banks and other lenders also offer a form of landlord insurance, meaning they cover:
  • Chattels (e.g. appliances, furniture, carpets, blinds and drapes) for accidental damage up to a set dollar limit.
  • Deliberate damage protection (insurance against deliberate damage or theft by a tenant, as well as loss of rent due to damage up to a set $ amount)
  • Rent protection (up to a set dollar amount if tenants leave without notice or need to be evicted for not paying rent). 
​
These are worth considering as an alternative to stand-alone landlord insurance - while they often won't be as comprehensive, they can offer considerable savings. 
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Your policy may require you to follow guidelines to be eligible to have a claim paid

It’s all very well having landlord insurance, but if you don’t reference check and take a bond, making a claim on damage to your rental property may be problematic. Policies vary, but generally to be eligible to make claims you’ll need to:
  • Select your tenants carefully and obtain a reference
  • Collect bond and rent in advance
  • Complete property inspections at least twice a year
  • Send letters to tenants when rent is 14 days in arrears.
  • Make application to the Tenancy Tribunal for "vacant possession" at 21 days in arrears (this means the tenants are ordered to leave the property). 

If you use a professional property manager such as a real estate agent, you may find this is already done for you, but do check as you may have a claim refused if there has been a lack of care taken. 

Some policies, such as AMP's EverydayPlus Landlord insurance requires you to go further by:
  • Exercising reasonable care in the selection of each person who is a tenant;
  • Keeping records of the checks undertaken and references obtained
  • Keeping photos and written records of the inspections
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Ready to buy landlord insurance?

Once you’ve become familiar with the basics and have made a decision to get landlord insurance, it’s time to get the best quote for your needs. Unlike home and travel insurance, there are no price comparison websites for landlord insurance.
 
Get the best policy without becoming overwhelmed by the details

Tip 1 – Read our Best Buy Landlord Insurance policies below to get an idea of price and coverage
We have put together a number of quotes from Tower, AMI, AMP, AA Insurance, State and other landlord insurers for a number of sample properties. The purpose is to help landlords understand the cover level and make it easier to pick the right policy  while reducing the chance of overpaying for cover.  

Tip 2 – Contact an insurance broker
Insurance brokers are the experts and will have access to market information and quotes that you won’t. If you have a specific requirement or want to talk to someone about a particular issue, searching for recommended local brokers is the way to go. As mentioned above, not every insurance company works with brokers, so the policies offered by a broker may not be the full range available in the market. 

Tip 3 - Check your policy
Make sure the quote offers the right coverage, and consider what excess levels or extra coverage you are happy with. Higher excess and less coverage equals a cheaper quote, so it’s worth adjusting the policy details to get a cheaper quote.

Tip 4 – Lower the excess only if your insurance is fully comprehensive (and vice versa)
As mentioned above, the smaller your excess, the higher your annual premium. Landlord insurance excess ranges from $300 to $2,500. If you want full coverage for instances of theft and burglary damage, it’s probably best to choose a lower excess so you can claim without too much penalty.

​Landlord Insurance Best Buys

  • Well known insurers such as Tower, AA Insurance, AMI, AMP, State, Initio and YOUI all sell landlord insurance. 
  • Each policy is "home only", no contents, but some policies include a limited degree of contents cover for items such as whiteware, blinds and flooring. 
  • We obtained quotes for three example properties, and specify cover and limitations of each policy in the sections below.
  • Our sample properties included an Auckland home, a Dunedin student flat and a Wellington villa. ​
  • For an easy-to-follow policy comparison between all landlord insurance providers, download our PDF Guide
Our View: The Best Insurers
Overall,  our view is that Tower and Initio offer the most comprehensive landlord insurance across all the providers we compared. Specifically, Tower and Initio's landlord insurance policies offer the following as standard:
  • Deliberate damage by your tenant
  • Loss of rent if the property cannot physically be rented
  • Contents up to around $20,000
​
Best Methamphetamine Protection Policy
If you are wishing to insure your property primarily for meth lab and meth consumption protection, we found Initio offers the most comprehensive insurance for consumption, and more importantly, manufacturing. 

Initio's cover for damage caused by methamphetamine contamination
  1. Consumption - up to $30,000
  2. Manufacturing - up to the sum insured, covering you if your property needs extensive work and/or demolition and rebuilding
  3. Loss of rent - up to $20,000 if you cannot rent your property while it is repaired or rebuilt. 

We've outlined the offerings of all landlord insurance policies we researched below to ensure an accurate comparison and to highlight the strengths and/or limitations of each policy. 
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 Best Buys - Example Quotes for properties in Auckland, Wellington and Dunedin
Example 1: 3 bedroom free standing house, 120m2, Auckland
QV Value: $1,000,000
Property insured for: $400,000
Specifications: Single level, concrete block built with metal/iron roof. Built in 1970. Flat section (no gradient). No burglar alarm. Built on a concrete slab. Includes a two car garage ​
Our Pick - Best Overall Value
  • Tower - $1,175.61 with a $500 excess; the standard policy covers replacement value, up to $30,000 for methamphetamine contamination claims, 8 months rent for damage to your property, 8 weeks rent for any other reasons that are covered (importantly, there is no cover if property is uninhabitable because of chemical contamination), up to $20,000 for deliberate damage by tenants and up to $20,000 for whiteware and window coverings. Download the full policy document

Other Quotes (annual policy cost):
  • AA Insurance - $1,341.25 with a $500 excess: the standard policy covers replacement value, and loss of rent up to $20,000 when a home is uninhabitable due to a covered event such as a fire or earthquake. Download the full policy document 
  • AMI - $1,204.66, with a $550 excess: the standard policy covers replacement value, up to $30,000 for methamphetamine contamination claims and up to $1,500 for damage caused by a leaking internal water pipe or internal waste disposal pipe. Lost rent is not covered under the standard policy. Download the full policy document 
  • AMP - $1,359.40 with a $500 excess: the standard policy covers replacement value and up to $30,000 for methamphetamine contamination claims.  Lost rent is not covered under the standard policy. Download the full policy document
  • Initio - $1,088.79 with a $650 excess, the standard policy covers replacement value, and loss of rent up to $20,000 when a home is uninhabitable due to a covered event such as a fire or earthquake. Download the full policy document
  • ​State - $1,935.52 - with a $550 excess (rising to $2,500 for any meth-related claim), covering loss of rent for up to 12 months. Download the full policy document
  • YOUI - $893.98 with a $500 excess, the standard policy covers replacement value, temporary rental accommodation and loss of rent for up to 12 months. Download the full policy document
  • Rentsure (doesn't cover replacement value): $353.34 with a $500 excess, the standard policy covers up to $35,000 for Malicious Damage or Theft by the Tenants, up to 10-52 weeks rent for tenants who don't give the required notice, refuse to be evicted, die or prevent access. This is a bolt-on insurance to a stand alone home insurance policy.
Example 2: 6 bedroom townhouse, 150m2, Dunedin 
QV Value: $750,000
Property insured for: $500,000
Specifications: Two level, concrete/block exterior with metal/iron roof. Built in 2000. No burglar alarm. Built on a concrete slab. No interior or exterior garage.
Our Pick - Best Overall Value
  • Tower - $1399.84​ with a $500 excess; the standard policy covers replacement value, up to $30,000 for methamphetamine contamination claims, 8 months rent for damage to your property, 8 weeks rent for any other reasons that are covered (importantly, there is no cover if property is uninhabitable because of chemical contamination), up to $20,000 for deliberate damage by tenants and up to $20,000 for whiteware and window coverings. Download the full policy document

Other Quotes (annual policy cost):
  • AA Insurance - $1,433.45​ with a $500 excess: the standard policy covers replacement value, and loss of rent up to $20,000 when a home is uninhabitable due to a covered event such as a fire or earthquake. Download the full policy document 
  • AMI - $1,227.57, with a $550 excess: the standard policy covers replacement value, up to $30,000 for methamphetamine contamination claims and up to $1,500 for damage caused by a leaking internal water pipe or internal waste disposal pipe. Lost rent is not covered under the standard policy. Download the full policy document 
  • AMP - $1,546.61​ with a $500 excess: the standard policy covers replacement value and up to $30,000 for methamphetamine contamination claims.  Lost rent is not covered under the standard policy. Download the full policy document
  • Initio - $1,284.31 with a $650 excess, the standard policy covers replacement value, and loss of rent up to $20,000 when a home is uninhabitable due to a covered event such as a fire or earthquake. Download the full policy document
  • YOUI - $3,000 with a $500 excess, the standard policy covers replacement value, temporary rental accommodation and loss of rent for up to 12 months. Download the full policy document
  • State - $1,935.52 - with a $550 excess (rising to $2,500 for any meth-related claim), covering loss of rent for up to 12 months. Download the full policy document
  • Rentsure (doesn't cover replacement value): $353.34 with a $500 excess, the standard policy covers up to $35,000 for Malicious Damage or Theft by the Tenants, up to 10-52 weeks rent for tenants who don't give the required notice, refuse to be evicted, die or prevent access. This is a bolt-on insurance to a stand alone home insurance policy.
Example 3: 4 bedroom home, 170m2, Wellington
QV Value: $800,000
Property insured for: $600,000
Specifications: Two floor, internal garage, weatherboards with tile roof. Built in 1980. No burglar alarm. Built on a concrete slab. 
Our Pick - Best Overall Value
  • Tower - $2,551.73 with a $500 excess; the standard policy covers replacement value, up to $30,000 for methamphetamine contamination claims, 8 months rent for damage to your property, 8 weeks rent for any other reasons that are covered (importantly, there is no cover if property is uninhabitable because of chemical contamination), up to $20,000 for deliberate damage by tenants and up to $20,000 for whiteware and window coverings. Download the full policy document

Other Quotes (annual policy cost):
  • AA Insurance, AMI and ​State - Due to the earthquake events of 14 November 2016 affecting the central South Island and lower North Island, these insurers are assessing applications for landlord insurance in high-risk areas on a case by case basis and consulting with their respective underwriters. We have not progressed to a quote at this time. 
  • AMP - $2,289.09 with a $500 excess: the standard policy covers replacement value and up to $30,000 for methamphetamine contamination claims.  Lost rent is not covered under the standard policy. Download the full policy document
  • Initio - Due to the earthquake events of 14 November 2016 affecting the central South Island and lower North Island, Initio is not providing any new quotes for this region until further notice.
  • ​YOUI - $2,854.00 with a $500 excess, the standard policy covers replacement value, temporary rental accommodation and loss of rent for up to 12 months. Download the full policy document
  • Rentsure (doesn't cover replacement value): $353.34 with a $500 excess, the standard policy covers up to $35,000 for Malicious Damage or Theft by the Tenants, up to 10-52 weeks rent for tenants who don't give the required notice, refuse to be evicted, die or prevent access. This is a bolt-on insurance to a stand alone home insurance policy.
landlord insurance new zealand
An extreme cases of rental property vandalism

How to make a claim on your landlord insurance

In almost every case, making a claim will be an easy process. Knowing your policy’s excess level and terms and conditions will limit any nasty surprises.  To have the best experience making a claim, follow these steps:
  1. Immediately after an event occurs, you must take all reasonable steps to prevent further loss
  2. Call the police in case of theft, burglary or vandalism
  3. Contact your insurer and give the full details what happened. If you purchased the policy through an insurance broker, you may need to file the claim with them instead. 
  4. Submit your claim as soon as possible with all the paperwork
  5. Keep damaged property for the insurer to inspect and assess loss
  6. Provide the details of any person who may be responsible for the damage or loss
  7. If you have purchased landlord insurance through an insurance broker, they can help you organise the claim – a big help if your insurer is reluctant to pay. 

If your claim is rejected, appeal and complain
  • Jump on the phone and explain why your claim meets the T&Cs of the policy you bought.
  • If they don't agree, you can lodge a complaint with the Insurance & Financial Services Ombudsman Scheme which resolves disagreements between customers and their insurers.
  • Their free-of-charge service will make the final decision about your claim and order the insurer to pay out if they find in your favour. 
  • If your insurer isn't a member, you can complain to Financial Services Complaint Ltd who follow a similar process.