Effective Ways to Reduce Insurance Costs for Your Investment Property

Managing landlord insurance costs is crucial, yet it’s often overlooked in property investment. Since premiums can be a significant expense, many landlords accept quoted costs without exploring ways to optimise them.

However, with the right strategies, you can ensure adequate coverage while keeping costs under control. So, how can you save on landlord insurance without compromising protection? Here are some key tips:

1. Review Your Insurance Policy Annually

Review your landlord insurance policy each year to ensure you have the right coverage at a competitive price. Your policy should evolve as your circumstances change.

Take time to reassess your sum insured, coverage limits, exclusions, and add-ons annually. Consider:

• Have property values increased due to market shifts or renovations? This can affect rebuilding costs and the amount of coverage needed.

• Has the crime rate in your area risen, increasing your risk?

• Do you now qualify for discounts based on loyalty or claims history?

An annual review helps you avoid both underinsurance (which leaves you vulnerable) and overinsurance (which leads to higher premiums). It’s also an opportunity to check for unnecessary extras that might be inflating your costs, such as extended loss-of-rent coverage.

2. Bundle Your Landlord Insurance Policies

If you own multiple rental properties, consider bundling them under one policy with the same insurer. Many insurers offer multi-property discounts: typically ranging from 5–15%—allowing you to consolidate your policies for significant savings. Bundling also simplifies insurance management, making it easier to handle claims and renewals with a single provider. However, always compare bundled policies with individual ones to ensure you’re getting the best deal. Bundling doesn’t always guarantee the lowest price, so reviewing both options carefully is essential.

3. Increase Your Deductible

Opting for a higher deductible (also known as an excess in Australia) is a straightforward way to reduce your premiums. The deductible is the amount you pay out-of-pocket before insurance coverage applies. For example, increasing your excess from $500 to $1,000 or $2,500 could reduce your premiums by 10–25%. However, ensure you have enough savings to cover the higher excess if you need to make a claim.

When considering this option, think about your risk tolerance and the value of your property. While a lower excess may be better for high-risk or high-value properties, increasing it can result in significant cost savings for many landlords.

4. Enhance Security

Many Australian insurers offer discounts for landlords who install security features such as alarm systems, deadlocks, sensor lights, and fences. For instance, installing a monitored alarm system or reinforcing door frames can lead to noticeable premium reductions. Even smaller improvements, like better lighting or fencing, might make you eligible for discounts. Check with your insurer to confirm which security measures can help lower your costs.

5. Maintain Your Investment Property

Insurers assess the condition of your property when setting premiums. Properties in disrepair present higher risks and can drive up insurance costs.

Regular maintenance, prompt repairs, and annual inspections can help keep your property in good condition. Document any maintenance work and keep receipts as proof. Sharing this information with your insurer may help lower your premiums, as well-maintained properties are seen as lower risk.

6. Shop Around

Don’t automatically renew your policy each year - take the time to compare quotes from different insurers. Rates can vary significantly for similar coverage. Contact at least 3–5 major insurers, as well as local providers, to compare premiums, coverage options, exclusions, and excesses.

7. Inquire About Discounts

Many insurers offer special discounts, but they’re not always advertised. Discounts may be available for:

• Multi-policy bundling

• Loyalty or long-term customers

• A good claims history

• Security systems and safety upgrades

When reviewing your policy, ask your insurer about available discounts and the eligibility criteria. Being proactive can uncover savings you might otherwise miss.

8. Work With a Broker

An insurance broker can provide personalised advice and help you compare policies from multiple insurers. Brokers often negotiate better pricing and identify cost-saving strategies tailored to your situation.

While brokers typically earn commissions from insurers, their expertise can justify the cost. For many landlords, the convenience and ability to secure better coverage make working with a broker worthwhile.

By implementing these strategies, you can reduce your landlord insurance costs while maintaining the protection your investment property needs.