If your tenant stops paying rent, will your landlord policy pay you anything?

Accidental damage, such as a hole punched through plasterboard by moving furniture or a burst pipe from a tenant's washing machine, is generally treated like any other insured event. Malicious damage is assessed far more narrowly on some policies. A 2021 determination published by the Australian Financial Complaints Authority (AFCA) on a landlord insurance claim shows how. A landlord claimed a long list of damaged items as malicious. The insurer and AFCA found that only some met the "malicious acts" test: a cracked toilet door and wall holes. Missing door knobs and fittings were covered under theft instead, and cracked windows and a missing shower screen under accidental glass breakage. Items like carpet damage, blinds and general wear and tear were not covered at all.

On the wording we place most, there is no "was this malicious" test for damage to your own property: you don't have to prove malice; what matters is that the damage wasn't something you caused or intended. Cover attaches to accidental damage or loss. Only specific exclusions carve items back out: superficial scratching and scuffing, a tenant's general neglect or poor housekeeping, and theft (see below).

There is a limit, though. The wording never names deliberate tenant damage as covered. It also defines malicious damage as something different from accidental damage. So if a tenant wrecks a room, how that is treated is a claims question the wording itself doesn't settle. We've seen that distinction decide claims in our clients' favour. If the property is vandalised or maliciously damaged, the wording asks you to tell the police.

You still need to ask for theft cover on the wording we place most. If a tenant walks off with your fixtures or fittings, three of the five landlord wordings we compared pay only under an optional section. The other two include it as standard. It's worth having: on the wording we place most, it scales with your buildings and contents sums insured, not a flat dollar cap.

On the wording we place most, loss of rent runs for up to 24 months. The direct products we checked cap it at 12 months. Loss of rent is not rent-default cover (see the next section). Landlord liability responds if a tenant, or a visitor to the property, is hurt and comes after you as the owner. On the wording we place most, its limit is whatever figure your schedule shows, not a fixed amount bundled with the policy. Check it's enough.

Once rent is seven days overdue, you (or your property manager) can issue a formal notice to remedy the breach. That gives the tenant a further period to pay. If it still isn't paid, you can issue a notice to leave, with a minimum further notice period before they have to go (Residential Tenancies Authority, Queensland). That process takes weeks, and all that time you carry the mortgage on a property that has stopped producing income.

On the wordings we place, rent-default cover is capped. On most, it won't pay rent that was already in arrears when the policy started. Cover switches on once the arrears are cleared and the tenant has then paid on time for several consecutive weeks. It pays once you've run the legal process above, from notice to remedy through to eviction, not from the day a tenant first falls behind. The claim stops the moment the property is re-let.

Depending on the wording, rent-default cover also pays between $3,000 and $6,000 toward the legal costs of evicting a tenant or recovering money or stolen property from them. It is inexpensive cover against one of the most common ways a residential tenancy goes wrong.

When a tenant damages several things, the insurer looks at whether it all happened in one event or built up over a period of neglect. It can try to apply a separate excess to every piece of damage. Those excesses can swallow most of your payout. We argue to bring them down to something commercial for the situation. That way, the cover you paid for has the best chance of reaching you. We also tell you plainly which optional extras are worth the premium and which aren't, even though selling you all of them costs us nothing.

We check two things, drawn from the five residential landlord wordings we compared in September 2026. First, tenant damage. On three of them, malicious damage by a tenant is written into the standard cover. On another, deliberate damage by a tenant is capped at $1,000 per event and per period, so deliberate damage above that $1,000 can be left with you. On that wording, any unused bond also counts as an extra excess. We check which of those you're on before a bad tenancy tests it.

Second, the rebuild. On one wording, the house is rebuilt new for old only if your schedule shows the words "including replacement benefit". Without them, the claim is settled on indemnity. Three of the others state an as-new rebuild in the wording itself. We read the schedule for those words before we place the policy, not after a fire.

If your rental is a strata unit, the body corporate's insurance covers the common property and, in most schemes, the building structure. That is not always so where a scheme's lots sit in a standard format plan and the buildings are detached, so know which plan your scheme is on (see Residential Strata Insurance). The body corporate's insurance does not normally cover your fixtures inside the lot or your liability as the lot owner. Some wordings include a lot-owner fixtures extension. On some of them, though, it only switches on once the building's own sum insured has run out. Its cover for a lot owner's lost rent is capped too, so rent above that cap is yours to insure. You still need your own landlord policy. The two aren't a substitute for each other.

If the unit you rent out sits above a shop or an office, the building is a mixed-use risk. Who insures it depends on how it is owned: see mixed-use building insurance.

1. Assuming a tenant who stops paying rent is an insurance claim. Not on a standard policy. That is what rent default is for.
2. Assuming every dollar of tenant damage will be treated as "malicious." The AFCA case above shows how one list of damage was split.
3. Not telling your insurer when the property sits vacant between tenants, or when you switch it to short-term or Airbnb-style letting. On the wording we place most, cover lapses if nobody has lived at the property for a continuous 90 days. That is the same threshold we see on the commercial side. Holiday letting, though, is its own category rather than "vacant."
4. Letting Queensland's smoke alarm law slide. Since 1 January 2022, every Queensland rental property has needed interconnected, photoelectric smoke alarms in every bedroom, in hallways connecting bedrooms, and on every level (Queensland Fire and Emergency Services; Residential Tenancies Authority, Queensland). It's a tenancy-law obligation, not an insurance clause. But a fire where an alarm should have been interconnected and wasn't can turn up in both a liability claim and a coroner's report.