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The Insurance detail that could wipe out years of returns
Michael and Priya still talk about the phone call, notifying them of the accident. Their NDIS-modified two bedroom investment property in Carlton, Victoria had sustained sudden internal damage during a behavioral incident. Reinforced doors had splintered, custom cabinetry was cracked and wall linings would need replacing.
The property manager’s tone was calm, but the quote to repair the damage was not. Within a week, the numbers were more than $19,000 in damage.
The conversation shifted from repairs to something more stressful. The sinking feeling in Michael and Priya's stomach…are we actually covered for this?
From the outside, the property still looked like a standard residential home. But it wasn’t being used like one, it had been leased to a supported accommodation provider and the home had been modified.
If the insurance policy hadn’t reflected that reality, the outcome could have been very different.
Because the occupancy type of the policy had been structured correctly from the outset, the claim was approved and paid in full. The repairs were a headache and the paperwork time consuming. But financially, Michael and Priya's portfolio absorbed the event - their finances were in the positive.
That relief - knowing the investment was protected - is something most property owners don’t think about until they need to.
The quiet detail that changes everything
What made the difference wasn’t luck. It was an occupancy type. It was understanding that landlord insurance is written around how a property is used, not just what it is.
And that’s where many well-managed portfolios quietly become exposed. If insurance hasn’t been structured for how a property is actually used, claims can be reduced or declined — even when premiums are paid and nothing was intentionally withheld.
According to Polina Kesov, Director at ii-A Insurance, this is one of the most common claim issues she sees. “Most investors don’t think they’ve done anything wrong,” she says. “They just don’t realise that changes in occupancy or use can affect how a policy responds.”
“Most investors don’t think they’ve done anything wrong.”
Where good portfolios can come unstuck
Most “mum and dad” investors are careful planners. They run the numbers and build buffers. They think about vacancy, interest rates and maintenance. Insurance, on the other hand, is often treated as a box to tick after settlement. Once in place, it quietly renews in the background year after year.
But properties don’t stand still. Tenants change and uses evolve. Homes are renovated, upgraded, or repurposed. A long-term rental might become a short-stay property. A single tenancy might turn into shared accommodation. A standard home might be modified for NDIS-supported living.
Insurance doesn’t automatically adjust when those changes happen. According to advisers at ii-A, this is where many claim problems begin — not because investors are careless, but because they assume their existing cover still fits.
When occupancy type makes the difference
James, a Queensland investor, owned a licensed shared accommodation property with six unrelated occupants. During a severe storm, high winds lifted sections of the roof and rainwater poured into bedrooms and common areas overnight.
The repairs were significant, as was the potential financial impact.
Because James had disclosed the property’s occupancy correctly and insured it under a specialist shared accommodation policy, the claim was paid — more than $29,000 in emergency works and repairs.
Under a standard landlord policy designed for a single tenancy, the outcome may have been very different.
The risk most investors never see
Insurance issues rarely stem from deliberate non-disclosure. They usually come down to small mismatches between how a property is insured and how it’s actually being used.
Common triggers include:
- Moving from long-term tenants to short-stay letting
- Leasing to supported accommodation or NDIS providers
- Renting rooms individually rather than as a single household
- Renovating without reviewing building sums insured
At claim time, these details can determine whether a payout is full, partial — or declined. From an investor's perspective, that’s not a technicality. It’s a cash flow event.
Simple question with big implications
Most investors regularly review their loans, rents and expenses. Insurance deserves the same attention. Does your landlord insurance still reflect how your property is being used today?
A short review can uncover savings, reduce risk, or highlight gaps you didn’t know were there. All of those outcomes help protect the performance of your portfolio.
Could you afford to be out of pocket $19,000?
You’ve invested in property to support your family’s future. Now it’s time to invest in protecting it.
Nobody thinks it will happen to them. But the reality is, it happens to someone. Every day.
If it’s been longer than 12 months since you last read your landlord insurance policy inclusions, our team of specialists can provide an obligation-free consultation.
Arrange a time to chat here. (Link to Claudio’s page)
