Most homeowners know exactly what their insurance covers at home: the building, plus a contents policy for everything inside. But when that same homeowner moves out and rents the old place out, or buys a second property to lease, the picture gets blurry fast. Ask what they now hold cover on inside the rental, and the answers get vague.
That vagueness is expensive. Homeowners letting a place unfurnished routinely assume they no longer own anything inside worth insuring once the furniture is gone, which is wrong in almost every case. Carpets, blinds, curtains, a freestanding fridge, a washing machine: somebody owns each of those, and the tenant does not.
Worse, the common shortcut, “I’ll just keep my usual contents policy,” misfires too. Standard contents products are built for people living in the home, not for a property being rented out to someone else. Below we untangle who owns what, which product responds, and why the inventory you build for one purpose quietly does a second job at tax time.
Three Separate Sets of Belongings, Three Different Policies
Every tenanted property holds contents belonging to at least two parties, and sometimes three. Confusing them is where most claim disappointment starts.
Your contents are the removable items you supplied: floor coverings, window furnishings, whitegoods, and any furniture in a furnished let. These respond under the contents component of landlord cover, not under the contents policy you hold on the home you live in.
The tenant’s contents are their own problem, and legally so. Their television, clothes and laptop sit outside your cover entirely, no matter what happens to the building. Renters can insure those independently, and a good property manager raises it at signing rather than after a burst pipe.
Strata common property is a third category again for apartment and townhouse owners, sitting under the owners corporation policy (called the body corporate in some states). Carpet in a shared corridor belongs there. Carpet inside your lot generally does not.
Getting these boundaries wrong produces one of two outcomes. Either you pay premiums on items you do not own, or you discover a gap at the least convenient moment.
What Actually Counts as Contents
Insurers draw the line in roughly the same place, using a physical test rather than a legal one. If an item would fall out when you tipped the building upside down, it is contents. If it stayed put, it is building.
Definitions are worth reading closely because the edges surprise people. NRMA contents insurance, for instance, lists furniture and bedding, carpets and rugs, curtains and blinds, and electrical items among general contents, while placing the building structure, sheds and garages, outdoor plants, lawns and anything permanently fixed firmly outside. It’s a good reference point for any homeowner, because it’s the kind of policy you’d hold on the home you live in, and landlord policies borrow the same taxonomy for their contents section.
Some items sit genuinely close to the line, and treatment varies by insurer:
- Fixed air conditioning often counts as building, while a portable unit does not.
- Ovens and cooktops are frequently treated as building because they are installed, whereas a freestanding fridge is contents.
- Light fittings usually fall to building, though decorative pendants sometimes do not.
- Blinds and curtains are almost always contents, despite being screwed to a wall.
- Solar panels and hot water systems generally sit with the building.
None of that is guesswork you should be doing alone. Read your product disclosure statement, then ask your insurer about any item worth more than a few hundred dollars where the answer feels uncertain.
Your Inventory Pulls Double Duty
Here is the part most homeowners-turned-landlords miss, which alone justifies the afternoon a proper list takes to build.
The items your insurer calls contents are, in tax terms, largely your depreciating assets. The ATO defines those as plant that does not form part of the premises, and its worked examples read like an insurance schedule: carpets, curtains, floating timber flooring, appliances such as a washing machine or fridge, and furniture. Same objects, two regimes.
Several practical consequences follow.
One inventory can serve both purposes, provided you record purchase dates, prices and receipts rather than just item names. A quantity surveyor’s report prepared when the property is first rented out covers the tax side thoroughly and doubles as a valuation starting point for cover.
Thresholds matter for record-keeping. Items costing $300 or less can generally be claimed immediately, unless they form part of a set that costs more than $300 in total (four $250 dining chairs, for example). Assets under $1,000 can be pooled, which means granular tracking effort concentrates on higher-value pieces. Those are exactly the items an insurer will later ask you to substantiate.
Second-hand rules cut the other way, though. This matters for homeowners in particular: if you bought a property after 7:30pm on 9 May 2017 and it came with existing assets, you generally can’t claim depreciation on those previously used items.
Assets you buy new for the rental are a different matter, and some exceptions apply, so check the details with your accountant. That has no bearing on insurability, so an item can be fully insurable while generating no deduction at all. Treating the two schedules as identical is a mistake; treating them as overlapping is accurate and useful.
How Furnishing Level Changes Your Exposure
Contents risk scales with what you supply, and the three common arrangements sit at very different levels.
Unfurnished lets still carry real exposure. Floor coverings and window furnishings alone across a three-bedroom house can easily run past $15,000 to replace, and both are highly vulnerable to water damage and to the sort of wear that turns into a bond dispute.
Part-furnished properties add whitegoods, which raises both value and claim frequency, since appliances fail and sustain damage far more readily than carpet. This is common when homeowners rent out their former home and leave the fridge and washing machine behind.
Fully furnished lets, including short-stay and executive rentals, carry the heaviest exposure by a wide margin, along with far higher turnover. Homeowners running these should confirm their policy contemplates that use at all, because some products exclude short-stay use outright or require it to be declared.
Whichever category you sit in, insure at replacement cost rather than depreciated value, and revisit that figure annually. Underinsurance in this category is common precisely because the numbers feel small item by item.
Landlord Insurance Is the Wrapper; Contents Is One Panel
Contents cover for a rental property almost never stands alone. It sits inside a broader landlord product alongside loss of rent, tenant damage, and liability, which is why shopping for it in isolation tends to produce a poor structure.
Those wrappers vary more than most homeowners expect, and inclusions that sound standard often are not. Writing for this masthead in January, REIACT chief executive Maria Edwards noted that some landlord policies extend to legal expenses for tenancy disputes while others cap or condition that cover heavily, and the same unevenness applies to malicious damage limits and to whether accidental damage caused by tenants is bundled in or sold separately.
Three questions separate adequate policies from thin ones. Does malicious damage by a tenant sit inside the contents section or only the building section? Does the wording treat tenant-caused accidental damage as standard or optional? Are contents replaced new for old, or settled at written-down value that leaves you funding the gap?
Evidence Is What Makes a Claim Payable
Contents claims fail on documentation far more than on wording, because unlike a burnt-out kitchen, a missing dishwasher leaves no trace of its own condition.
Condition reports carry most of that weight. As Lloyd Edge set out in this publication’s national guide to managing a rental property, a move-in and move-out checklist with photographs signed by both parties is what supports any later claim for damage, and requirements around inspections and notice periods differ by state.
Build the habit around four things. Photograph every room at each changeover, including inside cupboards and appliances. Keep receipts and model numbers in cloud storage instead of a drawer at the property. Update the schedule whenever you replace anything, which is also when your depreciation records need touching. Finally, note serial numbers on appliances, since theft claims move faster with them.
A working checklist
- List every removable item you supplied, room by room, with purchase date and cost.
- Confirm with your insurer which borderline items count as building rather than contents.
- Check how your policy settles contents: full replacement, or a depreciated payout.
- Verify that malicious and accidental tenant damage both extend to contents.
- For strata lots, obtain the body corporate policy and identify where its cover stops.
- Declare the letting arrangement, particularly for short-stay or furnished executive rentals.
- Give the same inventory to your accountant or quantity surveyor for depreciation purposes.
- Review the sum insured each renewal, and after any refurbishment.
- If you’ve just moved out and started renting, tell your insurer straight away. A standard home and contents policy may not respond once the property is tenanted.
Final Word
Contents cover looks like the small end of a homeowner’s insurance program once a property is rented out, and by premium it usually is. By claim frequency it is not. Carpets get flooded, appliances get stolen, blinds get destroyed, and none of it touches the building sum insured.
Spend an afternoon building the inventory properly. You will end up with a document your insurer needs, your accountant wants, and your future self will be very glad exists.
This article provides general information only and does not consider your personal circumstances. Seek advice from a licensed insurance adviser and a registered tax agent before making decisions.
