Legal 101

Guide to Home Insurance: Landlords and Tenants

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Home is where the heart is and making sure you have cover in place to protect you and your family is crucial for your peace of mind. Whilst these considerations might be traditionally taken into account it is becoming increasingly important for tenants (and landlords) to ensure they have adequate coverage in case of emergency. In this article we will introduce the types of home insurance before considering the tenant insurance in detail, discussing whether it is mandatory, what sort of things it should cover and its costs.

Introduction to Home Insurance

There are three main types of home insurance: building insurance, contents insurance and combined insurance.  Building insurance concerns the 'shell' of the property, such as the building's structure but crucially some of the building's permanent fixtures, such as bathroom and kitchens, and well as other buildings, such as sheds, that are present. Contents insurance covers the kernel of the property, such as its contents and possessions, like televisions, furniture and clothes. Combined insurance combines both of these covers into one policy- this is therefore a standard insurance policy for homeowners.

What is Landlord Insurance?

However, when renting a home, the tenant will not own the home meaning that if something were to go wrong with the 'shell' of the property it would not be the tenant's responsibility (provided they were not at fault). Getting a combined policy as a tenant seems therefore excessive as the tenant will be paying to cover the landlord's property which is the landlord's responsibility. The balance and full details of these obligations should be made clear in the tenancy agreement to ensure both parties are clear on their responsibilities and can therefore seek appropriate insurance policies.

Whilst not a legal requirement, landlord insurance often covers building insurance as the exterior of the property (the 'shell') is the landlord's responsibility. Such policies can include add-ons such as cover for contents, accidental damage (under an accidental damage cover), rent arrears and some even offer rent guarantee. However, unless otherwise stated in a tenancy agreement, the tenant will typically be responsible for the property's contents, including contents and appliances owned by the landlord that are not permanently installed, such as the items in a furnished rental.

What is Tenants Contents Insurance?

Tenant insurance (also commonly called renters insurance) is a type of contents insurance cover that covers the home contents or personal belongings of the tenant in the rented property. Tenant insurance differs from landlord insurance as it covers the personal possessions within the property, not just the property itself. Unless otherwise stated in a tenancy agreement, a landlord will not be responsible for a tenant's possessions. As aforementioned, whilst a landlord might have taken out buildings insurance, insurance providers do not typically include personal possessions cover in this package, unless the landlord has added contents cover to their policy. Although it is not a legal requirement, it is sensible for a tenant to get tenant insurance by searching for tenant insurance products that have the best coverage and price.

Tenant Insurance cover

Tenant insurance cover typically protects contents against theft and damage that might result from fire, storm, subsidence, floods, burst pipes or water leaks. The costs of alternative accommodation, such as a hotel, in cases of emergency is covered under some insurance policies. Under tenant insurance policies, contents that are damages are covered, including things like clothing, jewellery, furniture and electronic gadgets, such as televisions and potentially mobile phones.

There will often be exclusions listed within tenant insurance policies that limit what they will cover and when. Whilst this will change depending on the policy provider and the coverage a tenant chooses, damage that results from wear and tear is almost always and excluded and if a tenant's items are stolen, but with no sign of a forced or violent entry, the insurance company will likely reject a tenant's claims. Policy documents will also have standard single-item replacement value limits, meaning that a tenants insurance policy might not cover some of a tenant's high-value items. If this is the case, they will need to take our further, additional cover on these items. It is also important for a tenant to read their policy documents to understand whether it covers possessions outside of the home (such as bicycle cover) and how absence for an extended period, whether this be due to hospital care or holidays) might affect a tenant's right to make a claim.

It also unlikely that tenant insurance will cover business contents. If a tenant uses their home as a place to work, for which they will need their landlord's consent, work equipment and devices, such as laptops, will not be covered by tenant insurance.

Tenant Liability Insurance

Tenant insurance policies might also include tenant liability cover. Often in rental properties contents will be provided by the landlord, particularly in furbished properties. Unless otherwise stated, the tenant will be responsible for any accidental damage to these items. Ensuring a tenant's coverage is wide enough to replace these items is an important optional extra.

Costs

How much landlord and tenant insurance policies cost depends on what level of cover an individual chooses, such as whether they choose basic or premium coverage and whether they include any optional extras, such as legal expense cover, in their policy.

Landlord Insurance costs can be estimated by obtaining landlord insurance quotes from some of the big providers. Tenant insurance costs can also be calculated online and additional cover options can be taken into account.

To reduce the cost of your insurance, you might want to consider paying annually for your insurance, such as on a debit or credit card; choosing a policy with a higher premium, or; considering what add-ons you can remove from your building or contents insurance policy.

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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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