Strata vs landlord insurance – which covers what?

When it comes to what insurance is needed to cover investment properties within strata complexes, it can get a little confusing. We unpack which policy covers what...

Around 4.2 million Australians live in strata properties, with roughly 47 per cent rented. Demand has grown in recent years due to the cost-of-living crisis and lifestyle changes, with apartments making up 42 per cent of property transactions in the year to August.

Apartments remain more affordable than houses (median unit values are $223,000 lower) but vacancies are tight, rents are rising, and unit prices are growing faster than houses. The median weekly capital city unit rent is $650, and rents are expected to grow 24 per cent over the next five years, with most two-bed apartments exceeding $700 per week by 2030. Around 39 per cent of buyers are now investing in strata properties.

With more investors entering the market, it is essential they understand insurance requirements to avoid underinsurance.

Insuring units

A strata property is a unit within a larger building or complex, like an apartment, townhouse, or villa. Shared areas are managed by the owners’ corporation (or body corporate), while owners are responsible for their own units.

Insurance for strata rentals can be more complex than for standalone homes. It is not always clear what counts as common property, who insures what, and what each policy covers.

In simple terms: The building itself is collectively owned and insured by the body corporate, not the landlord. Landlords are responsible only for their own unit.

Strata insurance

There are around 3.2 million strata lots in Australia, with an insured value of about $1.4 trillion.

Strata insurance is legally required across Australia. While rules vary by state, strata policies typically cover: 

• The building structure, common property, and fixtures that form part of the building (e.g. balconies, windows, shared pipes, and underground services). 

• Appliances, furniture, equipment, and artwork in common areas. 

• Loss or damage from events like fire, storm, water, theft, or accidental/malicious damage. 

• Legal liability if someone is injured on common property. NOTE: Injury in a common area = strata insurance. Injury inside the unit = landlord insurance. Coverage changes at the apartment door. 

The body corporate is responsible for arranging strata insurance. Individual owners cannot take it out.  

Landlord insurance 

Do you need landlord insurance if you have strata insurance? Yes. Strata insurance only covers common property. Landlords need their own insurance to protect their unit and belongings, including: 

• Contents of the unit, such as personal possessions, fittings, and fixtures 

• Legal liability (protection when a landlord is legally liable for injuries/incidents. Claims can reach millions of dollars in compensation)

• Tenant-related losses, including damage or loss of rent 

Insuring houses 

For landlords of detached houses, insurance is usually more straightforward. The landlord owns the building and any outbuildings, so they need to insure the structure, including fixtures and fittings. They also need coverage for their own contents, legal liability, and tenant-related risks such as damage or loss of rent. 

Tenant insurance 

Whether renting a unit or a house, tenants need their own insurance to protect their personal belongings and cover their legal liability. Landlord insurance, whether for a strata property or a standalone house, does not cover the tenant’s possessions or liability. 

Quick guide – what each type of insurance covers  

Here is a coverage table of who is generally responsible for what when it comes to a strata unit. However, please note that this is a general list and cover can vary between policies, so it is important to check the details of each individual policy.

As mentioned, the above is only a general guide. Property owners should review their strata management contract and the strata insurance policy to understand exactly what the body corporate covers and what is not included. 

Strata, landlord and tenant insurance – how it works when something goes wrong 

Here is a simple example of how the different types of insurance apply in a strata rental. 

A storm hits and water enters a rented apartment through the roof, damaging the roof itself, the walls and ceilings, the carpets and blinds, and some of the tenant’s belongings. 

• Body corporate: Claims for damage to the roof, walls, ceilings, and skirtings, which are part of the building and covered by strata insurance.

• Landlord: Claims for carpets and blinds, which belong to the owner and are covered under the landlord’s contents insurance.

• Tenant: Claims for personal belongings, which are not covered by strata or landlord insurance and require the tenant’s own contents policy.

Key takeaway: Three separate claims are required, one for each insurance type.

The right cover 

While strata insurance can be confusing, it essentially involves three separate policies covering different areas: the body corporate for the building and common areas, the landlord for fixtures and fittings, and the tenant for personal possessions.

By knowing who is responsible for what in a strata complex, property investors can ensure their rental is properly protected.

EBM RentCover products:

• RentCover Ultra: Designed for strata units; covers contents, legal liability, and tenant-related risks.

• RentCover Platinum: Designed for detached houses; covers building, contents, and legal liability.

If you have any questions about landlord insurance for strata properties, please reach out to a member of our Expert Care team for guidance – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions. 

About the author

Sharon Fox-Slater

Managing Director, EBM RentCover

Adv Dip Fin Serv (Genl) GPIB FNIBA FAIM ANZIIF (Snr Assoc) CIP

Sharon joined EBM in 1993 and was part of the core team that helped launch one of Australia's first landlord insurance policies. She has transformed EBM RentCover from a small start-up into a national operation, protecting approximately 155,000 policyholders.

Sharon is passionate about the role insurance plays in providing certainty for people, in times of uncertainty. It is at the heart of everything she does. Sharon and her team of specialists strive to educate and empower property partners and landlords, helping them understand the true value of protecting investment properties.