Property Insurance Guide Australia: Building, Contents, and Landlord Cover (2026)

Insurance is one of the most overlooked aspects of buying property. Many buyers focus entirely on the purchase price, deposit, and stamp duty, then scramble to arrange insurance at the last minute — or worse, leave a dangerous gap in coverage. For a practical walkthrough of when and how to arrange cover, see our guide on insurance when buying a house. Getting insurance right from the outset protects what is likely your most valuable asset against events that could otherwise cause devastating financial loss.

This guide explains the different types of property insurance in Australia, when your coverage needs to start, how to compare policies, what common exclusions to watch for, and how to make a claim if the worst happens. It is relevant whether you are a homeowner, landlord, or strata owner.

Building Insurance vs Contents Insurance

Most insurers offer building-only, contents-only, or combined building and contents policies. Homeowners typically need both. If you are renting, you only need contents insurance. If you own a strata-titled property (apartment or townhouse), the strata scheme's building insurance covers the common property and the structure — but you still need contents insurance and may need additional cover for fixtures and improvements within your lot.

When Does Insurance Need to Start?

One of the most critical questions for property buyers is: when does the risk of loss or damage transfer from the vendor to you? The answer varies by state, and getting it wrong can leave you uninsured for a period where you are legally responsible for the property.

Risk transfer by state

• NSW: Risk generally passes to the buyer at exchange of contracts. You should arrange building insurance from the date of exchange, not settlement. If the property is damaged between exchange and settlement, you bear the loss unless the contract provides otherwise.
• Victoria: Risk generally remains with the vendor until settlement. However, it is still prudent to arrange insurance from exchange to avoid any gap, as contract terms can vary.
• Queensland: Risk passes to the buyer at 5:00 pm on the first business day after the contract becomes unconditional. Arrange insurance from this date.
• South Australia: Risk generally passes at settlement. However, review your contract carefully, as special conditions may alter this.
• Western Australia: Risk passes at settlement under the standard REIWA contract. However, it is advisable to arrange insurance from the date of the offer being accepted, as contract terms can vary.
• Tasmania: Risk passes at settlement under most standard contracts.
• ACT: Risk passes at settlement under the standard contract, but buyers should arrange insurance from exchange as a precaution.
• NT: Risk generally passes at settlement, but contract terms should be checked.

Types of Property Insurance

Home and contents insurance (owner-occupiers)

The most common form of property insurance for homeowners. A combined building and contents policy typically covers damage from fire, storm, lightning, explosion, impact (e.g., a tree falling on the roof), theft, vandalism, water damage (burst pipes, leaks), and sometimes flood and earthquake (these may be optional extras or subject to exclusions depending on your location).

Landlord insurance

If you are renting out your property, standard home insurance is not sufficient. Landlord insurance provides additional cover for risks specific to rental properties:

• Malicious damage by tenants: Covers intentional damage caused by tenants beyond normal wear and tear.
• Loss of rental income: Covers lost rent if the property becomes uninhabitable due to an insured event, or if a tenant abandons the property or is evicted and the property is vacant while being re-let.
• Tenant default: Some policies cover unpaid rent (usually with a waiting period and cap).
• Liability cover: Protects you if a tenant or visitor is injured on the property and you are found liable.
• Legal expenses: Some policies cover the cost of legal proceedings to recover the property or pursue unpaid rent through a tribunal.

Landlord insurance premiums are tax-deductible as a rental property expense. The cost typically ranges from $1,000 to $3,000 per year depending on the property type, location, and level of cover. Insurance is just one of several ongoing expenses investors need to budget for — our property holding costs breakdown covers the full picture.

Strata insurance

If you own a strata-titled property (apartment, townhouse, or villa in a strata scheme), the body corporate or owners corporation is required to hold building insurance for the entire complex. This strata insurance covers the common property (lobby, lifts, pool, gardens) and the building structure, including the standard fixtures and fittings within each lot as originally installed by the developer.

However, strata insurance does not typically cover:

• Your personal contents (furniture, electronics, clothing).
• Improvements or upgrades you have made to your lot (e.g., a renovated kitchen or bathroom).
• Temporary accommodation costs if you need to move out during repairs.
• Your legal liability as a lot owner.

You should take out a contents policy that includes cover for lot owner improvements and temporary accommodation. Review the strata insurance policy (available from the strata manager) to understand exactly what is and is not covered, and ensure your individual policy fills any gaps.

Flood and Bushfire Zones

If your property is in a flood-prone or bushfire-prone area, insurance can be significantly more expensive — or in some cases, difficult to obtain at all. Understanding your property's risk profile is an essential part of property due diligence.

Flood insurance

Since 2012, Australia has had a standard definition of "flood" in insurance policies (inundation by water that has escaped or been released from a natural watercourse). However, flood cover is treated differently by different insurers:

• Some policies include flood cover as standard.
• Some offer it as an optional extra (at additional cost).
• Some exclude it entirely for high-risk properties.

Check whether your policy includes flood cover, and understand the difference between "flood" (river or creek overflow), "storm" damage (wind and rain), and "stormwater runoff" (surface water from heavy rain that has not originated from a watercourse). A claim can be declined if the cause of water damage does not match the specific definition in your policy.

Bushfire insurance

Properties in designated bushfire-prone areas (mapped by state planning authorities) face higher premiums and may have specific conditions or exclusions. Insurers use the Bushfire Attack Level (BAL) rating to assess risk, ranging from BAL-LOW (no special requirements) to BAL-FZ (Flame Zone, the highest risk). Properties with a higher BAL rating will pay significantly more for insurance, and some insurers may decline cover entirely for BAL-FZ properties.

If you are buying in a bushfire-prone area, obtain insurance quotes before you commit to the purchase. An uninsurable or excessively expensive insurance premium is a hidden cost that can make a property unviable — and most lenders will not approve a loan without adequate building insurance.

Comparing Insurance Quotes

Common Exclusions and Limitations

Every insurance policy has exclusions — events or circumstances that are not covered. Failing to understand these exclusions is one of the most common reasons claims are denied. Here are the most important exclusions to watch for:

• Wear and tear, gradual deterioration, and lack of maintenance: Insurance covers sudden, unexpected events — not damage that develops over time due to poor maintenance. A leaking roof that has been neglected for years is unlikely to be covered.
• Flood (in some policies): As discussed above, flood cover is not universal. Check your specific policy.
• Earth movement and subsidence: Some policies exclude damage from ground movement, subsidence, or landslip unless caused by an insured event (e.g., earthquake, if earthquake is covered).
• Actions of the sea (coastal erosion, storm surge): Properties on the coast may face exclusions for damage caused by wave action, tidal surge, or coastal erosion.
• Deliberate or criminal acts: Damage you intentionally cause or that results from illegal activity on the property is not covered.
• Unoccupied property: Many policies reduce or exclude cover if the property is left unoccupied for an extended period (typically 30 to 60 consecutive days). This is particularly relevant for holiday homes and vacant investment properties between tenancies.
• Sub-limits on valuables: Contents policies typically cap the payout for individual items (e.g., $2,000 to $5,000 per item) and for categories of high-value items like jewellery, art, and collectibles. If you own valuable individual items, you may need to list them as specified items with a declared value.

The Risk of Underinsurance

Underinsurance is one of the most significant financial risks for Australian property owners. It occurs when your sum insured is less than the actual cost of rebuilding your home or replacing your contents. If you are underinsured and make a total loss claim, you will receive less than it costs to rebuild or replace — leaving you out of pocket by potentially hundreds of thousands of dollars.

Research consistently shows that a large proportion of Australian homeowners are underinsured. Common causes include:

• Confusing market value with rebuilding cost. Your home's market value includes land; rebuilding cost does not but includes demolition, site clearing, professional fees, and compliance with current building codes (which may be more expensive than original construction).
• Not updating the sum insured after renovations, extensions, or improvements.
• Not accounting for increased building costs due to inflation, labour shortages, or post-disaster demand.
• Deliberately underinsuring to reduce premiums — a false economy that can be financially devastating.

How to Make an Insurance Claim

Related Guides

• Property Due Diligence Checklist — The complete checklist for investigating a property before purchase, including insurance considerations.
• First Home Buyer Guide — Everything first home buyers need to know, including budgeting for insurance costs.
• Hidden Costs of Buying Property — A breakdown of all the costs beyond the purchase price, including insurance premiums.
• How to Read a Property Contract — Understand the insurance and risk transfer clauses in your property contract.