Insuring a Heritage-Listed Rental Property: What Landlords Need to Know

Every now and then, someone reaches out to us with a property that genuinely stops you in your tracks. This was one of those.

A landlord approached us about insuring a stunning heritage-listed building in regional South Australia. Originally built in the early 1900s as a bank, it had been converted into a residential dwelling - four bedrooms, two bathrooms, with all the original character you’d hope for. Coffered ceilings, polished hardwood floors, heritage light fittings. Even the old bank safe room was still part of the floor plan.

The owner had put real care into this place. They’d completed a full rewire, replaced the switchboard, and installed a new hot water service. They were preparing the property for lease and needed landlord insurance in place before a tenant moved in.

Beautiful building. Great people to work with. But from an insurance perspective, this was anything but straightforward.

Why this property was hard to insure

On paper, this property ticked almost every box that makes insurers nervous:

• Heritage-listed facade - the front of the building was heritage-listed, which creates obligations around how it can be rebuilt or restored
• Early 1900s construction - older buildings carry higher risk profiles for insurers
• Former commercial use - a building that started life as a bank and is now a residence doesn’t fit neatly into standard categories
• Regional location - some insurers have reduced appetite for properties outside metro areas

Any one of these factors can make a property harder to place. This one had all four.

We approached the market and, as expected, several insurers declined outright. The regional location alone was enough for some to say no. Others didn’t want to deal with the heritage complexity.

One insurer referred the file for underwriting review - meaning it went past the standard quoting system and onto an actual underwriter’s desk for manual assessment. That referral was approved.

Another insurer quoted, but at around $7,000. The approved referral came in at around $3,000 at the time of placement. That’s a massive spread for the same property, and it shows how much insurer appetite varies on non-standard risks.

The real issue: purchase price vs rebuild cost

Here’s where things got really interesting - and where the lesson for other landlords sits.

The property was purchased for a little over $200,000. That’s not unusual for a regional property. But the estimated rebuild cost was closer to $400,000.

That’s double the purchase price.

If the owner had set their sum insured based on what they paid for the property, they would have been massively underinsured from day one. And this is one of the most common mistakes we see with landlord insurance and sum insured calculations.

Purchase price reflects what the market was willing to pay for the property at a point in time. Rebuild cost reflects what it would actually cost to demolish the existing structure and rebuild from scratch to current building codes - including demolition, debris removal, professional fees, and council compliance.

For a property like this - with heritage features, non-standard construction, and unusual layout - the rebuild cost is often higher than the purchase price suggests.

The heritage trap most owners don’t think about

This is the part of the case that really stood out.

During placement, we raised the question of what would happen in a total loss scenario. The insurer indicated that a cash settlement may be possible. But there was a catch.

If the front facade is heritage-listed, the owner may still have obligations to restore that portion in line with heritage requirements - even if the rest of the building is gone. Heritage authorities can require that certain elements are reinstated to their original standard, regardless of what the insurance payout covers.

That means your sum insured isn’t just about rebuilding the house. It might also need to account for heritage restoration costs, which can be significantly more expensive than standard construction.

We asked the owner to check with Heritage SA to confirm their specific obligations. In this case, they confirmed that restoration to former glory wasn’t required - but the key point is that they checked. If they hadn’t, and a total loss had occurred, they could have been caught out.

This is something heritage property owners may want to consider before setting their sum insured. Your local heritage authority can clarify exactly what your obligations are.

When a higher excess makes sense

The owner in this case was comfortable taking a higher excess. Their reasoning was straightforward - the policy was really there for major loss events, not smaller day-to-day claims.

That’s a deliberate trade-off. A higher excess can sometimes reduce your premium, but it only makes sense if you’re genuinely comfortable absorbing smaller losses yourself. It depends on your financial position, your risk tolerance, and what you’re trying to protect against.

For this owner, protecting against catastrophic loss was the priority. They weren’t looking to claim for every minor issue. That approach helped keep the premium manageable while still providing meaningful cover for the scenarios that actually matter.

It’s worth noting this isn’t a universal strategy. For some landlords, a lower excess makes more sense. It’s a conversation worth having with your insurance broker based on your specific situation.

What made the difference

This case is a good example of where a broker adds genuine value. Here’s what we actually did:

• Identified the right markets - we knew which insurers would even consider a heritage property in a regional location, and which ones would decline without looking
• Managed the referral process - when the file needed to go to an underwriter for manual review, we presented the risk properly, including the upgrades the owner had completed
• Raised the rebuild cost question - flagged that the purchase price and rebuild cost were materially different, and made sure the sum insured reflected the actual exposure
• Flagged the heritage obligation - prompted the owner to check with Heritage SA about what would actually be required in a total loss
• Found the pricing gap - the difference between $3,000 and $7,000 for the same property shows why shopping one or two quotes online doesn’t tell you the full story

The owner’s documented upgrades - the rewiring, switchboard replacement, and hot water service - also helped. For older properties, showing underwriters that the risk has been actively improved can make a real difference to whether they’ll offer terms and at what price.

Key takeaways for heritage property owners

If you own or are buying a heritage-listed property as an investment, here are the things worth thinking about:

1. Purchase price is not a reliable basis for sum insured. For unusual buildings, the gap between purchase price and rebuild cost can be significant. A proper replacement cost estimate is worth considering.

2. Heritage obligations are worth understanding. Contacting the relevant state or local heritage authority can help clarify what restoration requirements apply in a total loss scenario. This can directly affect what an appropriate sum insured looks like.

3. Documented upgrades can help. Underwriters generally want to see that an older property has been maintained and improved. Keeping records of rewiring, plumbing, switchboard replacement, and similar work can support the placement process.

4. Expect a harder placement process. Heritage properties, regional locations, older construction, and non-standard building history all reduce the pool of willing insurers. A broker who can access multiple markets and manage referred files is generally going to produce a better outcome than comparing two online quotes.

5. Excess is a case-by-case decision. A higher excess can reduce premium, but it only suits owners who are genuinely comfortable carrying that level of loss. It’s worth discussing the trade-offs with a broker.

If you’ve got a property that doesn’t fit the mould - heritage, regional, unusual construction, former commercial use - get in touch with our team. These are the kinds of risks we deal with regularly, and we know which markets to approach.

Frequently asked questions

Can you get landlord insurance for a heritage-listed property?

Yes, but it’s harder to place than a standard residential property. Heritage listing, older construction, regional location, and non-standard building history can all reduce insurer appetite. Many standard markets will decline the risk, and placement often requires a broker who can refer the file to underwriters willing to assess it on its merits.

Does heritage listing affect the sum insured?

It can. If your property has heritage-listed elements like a facade, you may have obligations to restore those features in line with heritage requirements - even if the rest of the building is a total loss. This can make the true rebuild cost higher than a standard replacement estimate. Check with your local heritage authority to understand your specific obligations.

Why do some insurers decline heritage properties?

Heritage properties introduce complexity that many standard insurers prefer to avoid. Older construction materials and methods, heritage rebuild obligations, regional locations, non-standard building history, and higher rebuild costs all reduce appetite. These risks often need to be referred to an underwriter for manual assessment rather than being quoted through an online system.

Should I use purchase price as my sum insured?

Generally, no. The purchase price reflects what you paid for the land and building combined, often influenced by market conditions, location, and negotiation. The sum insured should reflect the cost to demolish and rebuild from scratch to current building codes. For unusual properties like heritage buildings or former commercial conversions, the gap between purchase price and rebuild cost can be significant.

How does a higher excess affect landlord insurance premiums?

A higher excess generally reduces your premium because you’re agreeing to cover more of the loss yourself before the insurer pays. But it only suits owners who are financially comfortable absorbing that amount and who are mainly seeking protection against major loss events rather than frequent smaller claims. Discuss the trade-offs with your broker before choosing a higher excess.

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Important: The information in this article is general in nature and does not take into account your specific objectives, financial situation, or needs. Before making any decisions about insurance, you should consider whether the information is appropriate for your circumstances and read the relevant Product Disclosure Statement (PDS). If you need advice tailored to your situation, speak to a qualified insurance broker.