How to ensure your tenants are covered by contents insurance

Industry Insight March 22nd, 2019
How to ensure your tenants are covered by contents insurance

While the cost of home contents insurance is at a record low, one in four homes still do not have any. It is often the case that tenants have an accident in their rental property, resulting in damage to their own belongings, or their landlord’s belongings.

Rather than asking your tenant to use their savings to foot the bill, a much safer option would be for them to invest in contents insurance.


To what extent is contents insurance the landlord’s obligation?

Tenants will always need contents insurance to protect their belongings within a rental property.

However, if you are a landlord renting out a furnished or part-furnished property, you will also need to purchase contents insurance. If you provide items like curtains, carpets and freestanding kitchen appliances in your rental property, they will need to be covered under a separate policy to that of your tenants’.

If you are a landlord, it is in your best interest to ensure tenants are covered by contents insurance, or at least that they are aware of the consequences of not having an insurance policy.

Landlords should advise their tenants that they should get the correct level of cover, rather than just opt for the cheapest option. Failure to do so could leave tenants badly out of pocket when it comes to making a claim. Tenants they should work out a rough estimate of how much their possessions are worth so that they are covered in full. It is better to overestimate than to underestimate.


What is covered by contents insurance?

1

Protects tenants against damage and theft to items in the tenants’ room or home, including household personal possessions and furnishings.

2

Will cover damage of contents caused by natural disaster, explosions, theft and vandalism

3

Contents insurance also protects tenants as the occupier of the property. The insurance company will cover you and your legal costs if a visitor is seriously injured and it’s proven to be your fault.

Does the cover required vary depending on the type of tenant?

The short answer is yes.

If you rent a HMO, where there are multiple tenants on a house share, some insurance companies may charge more. This is because if there are multiple people living together there is often a higher risk of damage or theft.

While your tenants could get cover on a room-only basis, often this only covers them for theft or damage to their bedroom. If they leave their possessions in other communal areas of the property e.g. in the kitchen or living room, they might not be covered.

If you rent to student tenants, they may actually not even need to take out their own insurance policy. Since the majority of students list their home address as their permanent address, their belongings may be covered under the insurance policy of their family home. Although this is not the case with every insurance policy, since cover does not always extend to shared properties.

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What is the difference between contents and buildings insurance?

Buildings insurance covers the physical structure of a property, whereas contents insurance protects the personal belongings kept in a property. Buildings insurance is for the foundations of a property including its roof, floors and walls. It also covers fitted fixtures e.g. kitchen units, windows, doors etc.

It is only landlords who are accountable for home buildings insurance. Under Section 11 of the Landlord and Tenant Act 1985, it is the landlord’s responsibility to maintain the integrity of the structure, fixtures and fittings of the property. Tenants are only responsible for their own contents within the property, not for the structure of the building.


Important things to note:

The policy may also be invalid if your property is unoccupied for more than 30 consecutive days during the year. If your tenants are going on holiday for an extended period of time, they would need to declare that to their insurers.

There is usually limited cover for accidental damages, remember to check the small print

Tenants may not be covered if they are burgled and there is no sign of forced entry e.g. if they were not in the property at the time and doors were left unlocked

Depending on the value of the items, there may be a limit on the insurance

If your tenant runs a business from home, they may require a separate policy for business-related contents

Tenants should let their insurers know if they have bought any new expensive purchases following the policy being taken out to ensure it is covered

More expensive items will need to be separately listed to be covered

Items kept in outbuildings tend to be covered under standard policies

Tenants may wish to extend their cover to outside the home, for instance if they are wanting to insure laptops or mobile phones. This will be offered as an add-on to the contents policy

Conclusion

To encourage your tenants to take out their own policy, landlords could make attaining tenant contents insurance mandatory within the tenancy agreement. A tenant’s contents insurance will not cost the landlord a penny but will ensure that their rental property is safe and tenants remain happy!


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