Do You Need Property Insurance and What Does It Cover?

Short answer: Yes, in most cases you should insure property you own. Lenders usually require buildings cover, and landlords need policies that cover the rental risks. Property insurance protects against damage and liability; which events are covered depends on the policy, so read the exclusions as carefully as the headline cover.

Key takeaways

• Insure for the cost to rebuild or replace, not the market price.
• Owner-occupiers, landlords and apartment owners need different policies.
• Floods, earthquakes and similar events are often excluded unless added.
• Photograph and document your property and contents before you ever need to claim.

What does property insurance cover?

Typical policies cover damage to the building (fire, storm and similar named perils), contents or belongings, liability if someone is injured on the property, and sometimes the cost of alternative accommodation after a covered loss. Always check the list of perils and the exclusions.

Which type of insurance do you need as an owner or landlord?

• Owner-occupier: buildings and contents cover, plus liability.
• Landlord: a policy designed for rented property, which may add loss of rent and landlord liability.
• Apartment owner: contents and your own liability and interior cover; the building may be insured by the owners' association, so ask what it covers.
• Overseas owner: check whether the policy applies when the property is empty and whether a local insurer is required.

How much cover do you need?

Insure the rebuilding or replacement cost, not the price you paid. Underinsurance can reduce what you receive on a claim. Review the sum insured every year, especially after renovations or when building costs rise.

How can you lower your premium?

• Choose a higher excess (deductible) you can afford.
• Fit approved security, fire and water-leak protection.
• Compare quotes on identical cover, not just price.
• Bundle policies with one insurer where it genuinely saves money.

How does the claims process work?

1. Make the property safe and prevent further damage.
2. Notify the insurer promptly and keep the claim reference.
3. Document damage with photos and receipts.
4. Understand whether the policy pays replacement value or deducts for age.
5. Keep records of all communication.

Does property insurance matter for investment returns?

Yes: insurance is a recurring cost that lowers your net yield, so include it when you calculate net rental yield.

Frequently asked questions

Is property insurance compulsory?

Not always by law, but mortgage lenders usually require buildings cover, and rules for landlords and apartment owners vary by country.

What is the difference between buildings and contents insurance?

Buildings insurance covers the structure; contents insurance covers belongings inside it.

Does property insurance cover floods and earthquakes?

Often not by default. They may need to be added or insured separately, so check the exclusions.

How much property insurance do I need?

Enough to rebuild or replace, not the market value. Review the sum insured yearly.

Do landlords need special insurance?

Landlords usually need a policy designed for rented property, which can add loss-of-rent and landlord liability cover.

Related: more answers to common property questions, how property is valued and how to calculate rental yield. This is general information, not financial, legal or tax advice.