Does a strata building policy replace landlord insurance?

Not on its own. The building policy covers the building, and in NSW the owners corporation must arrange it. A landlord policy is arranged by the owner and may address other risks, such as loss of rent and the owner's own fittings. The two should be read together to see what is covered and what is not.

Can I claim landlord insurance premiums on my tax return?

The ATO says insurance premiums for a rental property, including building, contents, public liability and loss of rent cover, are deductible. The ATO also says expenses are apportioned where a property is available for rent for only part of the year or has some private use. A tax agent can confirm the details.

Who pays if my tenant causes damage to common property?

It depends on state law and the scheme's rules. In Victoria, Consumer Affairs Victoria says the owners corporation can levy the lot owner where common property damage is caused by the owner or a lessee and either is not covered by insurance or costs less than the excess. The lot owner is the member of the scheme, not the tenant, so the owner's own policy and the lease terms are the documents to read. Other states have their own rules.

Does the tenant need insurance?

Moneysmart says renters generally do not need home insurance because the landlord is responsible for it, but they still need contents insurance for their belongings and legal liability, and that renters' products typically have more exclusions and limits than regular contents insurance, so comparing them matters. Tenancy laws set out what tenants and landlords owe each other, and the state tenancy authority is the place to check.

What does landlord insurance cover on a townhouse, and what does strata cover?

Landlord insurance is a product sold by insurers, so the policy wording defines what it covers, while the scheme's building policy in a strata or owners corporation townhouse covers a different layer. The ATO names the kinds of landlord cover whose premiums are deductible: building, contents, public liability and loss of rent. Moneysmart says that for a rented home the landlord arranges home insurance for the building, and the tenant still needs contents insurance for their own belongings. This guide uses New South Wales and Victorian rules as examples, as at October 2026.

A scheme's building policy and a landlord's policy overlap in places and leave gaps in others. Read both policy documents, and the scheme's records, before assuming something is covered.

Checked October 2026. Rules, rates and prices change, so confirm anything that matters with the source linked below.

The layers of cover on a rented townhouse

Layer	Who arranges it	What the sources say
Building structure	The owners corporation or body corporate in a scheme, or the owner of a freehold townhouse with no scheme	In NSW the owners corporation must hold building insurance and public liability cover of at least $20 million. In Victoria, Consumer Affairs Victoria says it must insure buildings on common property and hold public liability cover of at least $20 million for the common property. Other states set their own duties, so check the scheme's policy and the state rules.
Owner's contents and fittings	The owner	NSW says personal items such as furniture, electrical appliances, curtains and carpets may not be covered by the owners corporation.
Landlord-specific risks	The owner, through a landlord policy	The ATO lists building, contents, public liability and loss of rent insurance as deductible for a rental property.
The tenant's belongings	The tenant	Moneysmart says renters still need their own contents insurance to cover their belongings.

For how the building is insured in each type of title, see townhouse insurance: what you need and what strata insurance covers.

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Common gaps for landlords

Items a scheme does not insure. NSW says that even where damage is caused by a common property issue, items such as furniture, electrical appliances, curtains and carpets may not be covered by the owners corporation. A landlord who supplies carpets, curtains or appliances should check how a landlord or contents policy treats them, and what the scheme's policy says about fixtures and floor coverings in the state concerned.

Excess and premium costs. Whether a scheme can charge a lot owner for an insurance excess, an increased premium or damage caused by a tenant depends on state law and the scheme's rules. In Victoria, Consumer Affairs Victoria says an owners corporation can levy an owner for an excess or increased premium where a claim was caused by a culpable or wilful act or negligence of the owner, a lessee or their guest. It can also levy for damage to common property caused by an owner or lessee where the damage is not covered by insurance or costs less than the excess, and for the excess on a claim that solely relates to the owner's lot. Other states have their own rules, so check the scheme and the state regulator.

Special levies. A special levy for a particular capital improvement is not an immediate tax deduction, according to the ATO, though it may count as a capital works deduction once the work is complete.

Policy limits and exclusions. Moneysmart lists the points to compare in a policy: the premium for equivalent cover, the excess, exclusions, legal liability protection, any extended cover above the sum insured and limits on particular items or benefits.

Questions to put to an insurer or broker

Does the policy cover the building, contents and fittings the owner supplies, or only some of them?
Is loss of rent covered, for what events and for how long?
Is public liability included, and to what amount?
What is the excess, and does it differ by type of claim?
How are damage by a tenant and unpaid rent treated?
If the townhouse is in a scheme, what does the policy assume the scheme already covers?

These are questions to ask, not a list of what every policy includes. The product disclosure statement is the document that sets out what is and is not covered.

What it costs and how it is treated for tax

None of the sources used here publishes an average premium, so this guide gives none. Moneysmart says increasing the excess could reduce the premium, and that insurance is about the cost to rebuild rather than the market value. Cotality lists insurance, along with interest, maintenance and strata fees, among the holding costs that keep rental cash flow tight.

The ATO's 2026 rental properties guide allows a deduction for building, contents, public liability and loss of rent insurance on a rental property. Regular body corporate levies are deductible when incurred. The yield and costs guide shows where insurance sits in a net yield calculation.

Common questions

Does a strata building policy replace landlord insurance?: Not on its own. The building policy covers the building, and in NSW the owners corporation must arrange it. A landlord policy is arranged by the owner and may address other risks, such as loss of rent and the owner's own fittings. The two should be read together to see what is covered and what is not.
Can I claim landlord insurance premiums on my tax return?: The ATO says insurance premiums for a rental property, including building, contents, public liability and loss of rent cover, are deductible. The ATO also says expenses are apportioned where a property is available for rent for only part of the year or has some private use. A tax agent can confirm the details.
Who pays if my tenant causes damage to common property?: It depends on state law and the scheme's rules. In Victoria, Consumer Affairs Victoria says the owners corporation can levy the lot owner where common property damage is caused by the owner or a lessee and either is not covered by insurance or costs less than the excess. The lot owner is the member of the scheme, not the tenant, so the owner's own policy and the lease terms are the documents to read. Other states have their own rules.
Does the tenant need insurance?: Moneysmart says renters generally do not need home insurance because the landlord is responsible for it, but they still need contents insurance for their belongings and legal liability, and that renters' products typically have more exclusions and limits than regular contents insurance, so comparing them matters. Tenancy laws set out what tenants and landlords owe each other, and the state tenancy authority is the place to check.

Keep reading

Sources

This is general information, not financial, tax or legal advice. Get advice that suits your situation before you buy.