Why is landlord insurance not enough for a block of units?
Landlord insurance is designed for a single tenanted dwelling within a larger structure. It typically covers:
- Loss of rental income
- Tenant-caused damage to internal fixtures
- Contents you own inside the tenanted unit (carpets, curtains, appliances)
- Public liability restricted to the area inside the rented unit only
It does not cover the building itself, the roof over multiple units, shared walls, common stairwells, or external infrastructure like driveways and fencing. Critically, it also leaves a massive gap for injuries occurring anywhere outside the unit: driveways, gardens, stairs, and pathways are not protected.
Because the block is on a single title, there is no Body Corporate or Strata Manager to handle insurance. You are solely responsible for the entire structure and all common property liabilities. Without a dedicated building policy, a single storm event or liability claim could leave you personally exposed across every unit and every shared space.
What is the difference between building insurance and landlord insurance for multi-tenanted blocks?
| Factor | Landlord Insurance | Building Insurance (Non-Strata) |
|---|---|---|
| Roof, external walls, guttering | Not covered | Covered |
| Common areas (hallways, stairwells, laundry) | Not covered | Covered |
| Shared infrastructure (driveways, fencing, letterboxes) | Not covered | Covered |
| Landlord fixtures (carpets, blinds, split-systems) | Covered if specified | Often excluded: may require a contents add-on |
| Loss of rent | Covered | Optional add-on |
| Tenant damage (malicious or accidental) | Covered (up to limits) | Structural damage only |
| Public liability inside the unit | Covered | Covered |
| Public liability in common areas | Not covered | Covered (typically $20M) |
The key distinction: landlord insurance protects your interest as a landlord of a unit. Building insurance protects your interest as the owner of the entire structure, including every square metre from the front fence to the back boundary.
A note on fixtures: Building insurance covers the shell of the property, but items like carpets, curtains, and split-system air conditioners are often classified as landlord contents. Many insurers exclude these from building policies, so check whether you need a small contents add-on to avoid a gap when replacing flooring or window furnishings after a claim.
Where does liability coverage actually stop?
One of the most dangerous assumptions an owner of a single-title block can make is that four individual landlord policies equal total protection. In the Australian market, a significant liability gap exists between the units.
Landlord insurance typically provides coverage only within the four walls of the specific tenanted unit. If a tenant slips on a loose floorboard in their kitchen, you are likely covered.
The gap appears when someone is injured outside those walls. If a delivery driver trips on a cracked paver in the shared driveway, a visitor falls in the communal garden, or a tenant slips on a wet stairwell, a standard landlord policy will often decline the claim. Insurers view these as common areas that fall outside the individual rental agreement.
A dedicated Block of Units Building Insurance policy treats the entire title as the insured situation. It provides a single, overarching public liability limit (typically $20 million) that covers the full property, including all those areas where landlord insurance does not reach.
Who is responsible for what in a single-title block?
In a strata scheme, responsibilities are divided between the body corporate (building, common property) and lot owners (internal fixtures, contents). In a single-title block, those divisions do not exist. You carry full responsibility for both the structure and the common areas, with no shared arrangement to fall back on.
As the building owner, you are responsible for:
- Structural repairs to roofs, walls, foundations, and load-bearing elements
- Common area maintenance and damage, even if caused by a tenant
- External fixtures such as carports, fencing, and paved areas
- Public liability for injuries anywhere on the property
As a landlord of individual units, you may also need cover for:
- Loss of rent if a unit becomes uninhabitable
- Tenant-caused damage to landlord fixtures you own
- Legal liability arising from tenancy disputes
Many owners assume their landlord policy extends to the building. It does not. If a tenant reverses into a carport post and the structure collapses, your landlord insurer will likely decline the claim because carports are building infrastructure, not landlord contents.
Real-World Scenario: The Inherited Block
Sarah's Story
Sarah inherited a 1970s four-unit block from her parents. Each unit had a tenant, and she held landlord insurance on all four. When a severe storm tore sections of roofing off the building, she lodged a claim expecting full coverage.
Her insurer declined. Landlord insurance covered her for rental losses and tenant-related damage, but the roof was a building element. Sarah had no building policy in place because she assumed the landlord cover was comprehensive.
The repair bill exceeded $80,000. Because the block was on a single title with no body corporate or strata manager to share the burden, Sarah was personally liable for the entire amount.
Had she held a Block of Units Building Insurance policy, the claim would have been covered under storm damage, minus the excess.
How do I calculate the right sum insured for a block of units?
Underinsurance is one of the most common issues with multi-dwelling properties. Owners frequently insure based on:
- The market value of the property, which includes land and does not reflect rebuild costs
- The value of a single house, ignoring that a six-unit block costs significantly more to rebuild than one home
Your sum insured should reflect the full replacement cost of the entire structure, including:
- All units and their internal fixtures
- Common areas and shared facilities
- External structures such as carports, sheds, and fencing
- Demolition and debris removal
- Professional fees for architects, engineers, and council approvals
For a six-unit block, this figure can easily exceed $1.5 million even if the market value sits around $900,000.
The Average Clause risk: Most Australian building policies contain an Average Clause (sometimes called a Co-insurance Clause). If your sum insured falls below a certain threshold of the true replacement value, typically 80%, the insurer can proportionately reduce your payout on any claim, not just a total loss. If you are 50% underinsured, you may only receive 50% of a partial claim.
A professional building valuation or quantity surveyor report removes the guesswork and protects you from this clause being triggered.
What should I look for in a Block of Units building policy?
When comparing policies, ensure the following are included or available as add-ons:
- Flood and storm cover: Not all policies include flood as standard. Check the Product Disclosure Statement.
- Accidental damage: Covers structural damage that is not weather or tenant related.
- Public liability for the entire property: Confirm the policy covers common areas, not just individual units.
- Landlord contents or fixtures cover: If carpets, blinds, and air conditioning units are excluded from the building section, add a contents component.
- Loss of rent (building damage): Separate from landlord loss of rent; covers income loss when the building itself is uninhabitable.
- Fusion cover: Protects electric motors in shared infrastructure such as lifts, pumps, and air conditioning systems.
How does Block of Units building insurance fit with my existing landlord cover?
The two policies work in parallel:
- Building insurance responds when the structure is damaged, regardless of cause, and covers liability across the entire property.
- Landlord insurance responds when your tenancy arrangement is disrupted or when tenant-related incidents occur inside a unit.
You do not need to choose between them. Most owners of single-title blocks require both to avoid coverage gaps. The building policy handles the shell, the common areas, and the overarching liability exposure. The landlord policy handles rent protection, tenant damage, and unit-specific contents where applicable.
Next steps
If you own a block of units on a single title and currently rely solely on landlord insurance, it is worth reviewing your exposure. A building insurance policy designed for non-strata properties ensures you are not left personally liable for structural damage, common area incidents, or liability claims that landlord cover was never designed to handle.