Investment Property Insurance in Queensland

Canstar publishes average annual landlord insurance premiums by state, on a $1,000 excess. Queensland excluding the north averages $2,529 a year for a freestanding house. North Queensland averages $4,482.

For comparison on the same basis, Western Australia averages $2,181 and South Australia $2,108. Queensland is above both, and North Queensland is in a category of its own.

The reason is weather. Cyclone and flood exposure prices into every premium north of a certain line, and parts of the south east carry flood loading of their own.

The Sunshine Coast sits in the lower band rather than the North Queensland one, so the $2,529 figure is the more relevant starting point here. It is still an average across a large and varied state, and your postcode will move it.

Canstar's Queensland figures are $2,529 for a house and $396 for a unit. That is a factor of six, and it looks like a bargain until you understand what is behind it.

The strata plan already insures the building. A body corporate holds building cover over the whole structure, and you pay for it through your body corporate levies rather than through an insurance premium.

So the unit figure is not the cost of insuring a unit. It is the cost of the part the strata plan does not cover: your interior fixtures, loss of rent, and landlord liability.

The trap runs the other way too. Buying full building cover on a strata property means paying twice for the same structure, once through the levies and once through your own policy.

If the property is a unit or a townhouse, the question to ask the insurer is which parts the body corporate policy already covers, and to buy only the rest.

The words get used interchangeably and they should not be, because they protect against different failures.

Building insurance covers the structure: fire, storm, flood where it is included, and rebuilding. If you own a freestanding house, nobody else is carrying this and your lender will usually require it.

Landlord insurance covers the tenancy: loss of rent when a tenant defaults, malicious or deliberate damage by a tenant, and your liability as an owner. It does not rebuild a house.

For a freestanding house most policies bundle both, which is why the Queensland house average is $2,529. EBM RentCover publishes an average of $470 a year for its landlord-only product, which gives a sense of what the tenancy half costs when the building half is not in the policy.

Read the loss-of-rent limits specifically. They are usually capped both in weeks and in dollars, and the caps vary considerably between insurers.

FAA's investment property calculator carries an insurance default of $4,000 a year.

That is about 58% above Canstar's $2,529 average for a Queensland house outside the north. It is worth saying so rather than leaving a reader to assume our number is the market rate.

The default errs toward caution, which is the right direction for a planning tool. A model that understates a recurring cost produces a projection that looks better than the property will.

It is still a default rather than a quote. If you are modelling a specific property, replace it with an actual figure from an actual insurer, because postcode, dwelling type, sum insured and excess move it more than any general average can capture.

The same applies to every other default in that tool. They are starting points that make the arithmetic work, not predictions about your property.

Five things, in roughly the order of how much they matter in Queensland.

Landlord and building insurance premiums on a rental property are deductible against rental income in the year you pay them.

That puts insurance in the simplest category of the three the tax rules use. Unlike stamp duty, it does not go to the cost base. Unlike a depreciating asset, it is not spread over an effective life. You pay it and you claim it.

The usual condition applies: it has to relate to the period the property was rented or genuinely available for rent.

If a policy period straddles a change in how the property is used, that is a question for your accountant rather than an assumption to make.

We manage residential investment property on the Sunshine Coast from our Maroochydore office, and insurance comes up constantly in that work.

We are not an insurance broker, we hold no insurance authorisation, and we do not recommend policies or insurers. Nothing on this page is a recommendation and no insurer named here has any arrangement with us.

What a manager can usefully do is tell you what is actually going wrong in the properties we look after, so you know which cover is worth reading closely rather than skimming. Loss of rent and deliberate damage are the two that get claimed on.

For the policy decision itself, use a broker or compare directly, and read the product disclosure statement for the loss-of-rent caps before you compare on price.