Tenants insurance is dedicated protection for people renting a property. There are two types of tenants insurance, and some opt for just one or both. Tenancy liability insurance safeguards against accidental damage to the landlord’s contents, while tenants contents insurance covers the tenant’s personal property should it be damaged or destroyed.
Tenants liability insurance claims are honoured when the damage was caused accidentally, but they do not qualify when harm was done on purpose. This is classed as malicious damage, and a landlord may instead decide to deduct a cash equivalent from the deposit a tenant paid.
A tenant needs contents insurance if they wish their items to be replaced if they were destroyed or stolen. Landlord insurance does not generally protect a tenant’s belongings, so they run the risk of being out of pocket if something happened to them, such as damage in flood.
Tenants insurance is not required by law. Instead, it is a personal choice of whether the tenant wants the protection. No matter how careful a person can be, accidents can happen. A home could be flooded, a fire could break out, or a burglar could steal from the property. In these cases, the tenant would only be able to claim for the affected items if they had tenants’ content insurance.
Tenants can take out insurance at any time during their agreement. It can be sorted in advance or partway through their tenancy.
Does landlord insurance cover tenants’ belongings?
Landlord insurance does not cover tenants’ belongings. A tenant would need to take out their own contents insurance.
If a property is furnished it is more likely a landlord has taken out contents insurance, but that is only to cover the items that belong to them, such as the oven, fridge, washing machine and, where applicable, sofas and beds.
Should an incident take place at the property, such as flooding, burglary, or even an explosion, any contents belonging to the tenant would not be covered by the landlord’s policies. The landlord, assuming they have a policy in place, would be protected for damage to the building and any other extras they have added to their policy, but not the tenant’s items.
Do you need contents insurance if you rent?
Contents insurance for renters is a personal preference and can depend on many factors. There is no legal requirement for a tenant to take out contents insurance, and it can’t be demanded as a requirement of a tenancy agreement.
Should there be a fire or theft at the property and the tenant does not have contents insurance, nothing can be done to remunerate for their loss. The landlord would have no obligation to meet the cost of a tenant’s items.
This is why a tenant needs to assess the risk of an incident occurring and their items’ value. Do they own a high-value computer or precious item of jewellery? Do they live in an unsafe neighbourhood or with people regularly coming in and out of the property? Perhaps the home has a real wood fire that could pose a risk or a history of flooding in the area. These are all scenarios to consider when deciding whether to protect belongings.
According to a report by the Financial Inclusion Commission, 81% of renters do not have contents insurance. But the Financial Conduct Authority believes two-thirds of renters are at risk of harm due to a lack of financial resilience so that contents insurance could be a much-needed safety net.
Who pays building insurance, landlord or tenant?
The landlord is responsible for building insurance, not the tenant. Building insurance offers protection to the structure of the property and anything fixed to it. So if a window smashes or a kitchen cabinet breaks, this will fall under the building insurance if the landlord has a policy.
It is not a legal requirement for a landlord to have building insurance, but it is advised for the risk of fire, flood, or criminal damage.
It is not down to the tenant to pay for damage caused to a building in case of an insured event. And a tenant should note that fixed items covered by building insurance can also be found inside the property. Building insurance covers things like the walls, windows, fences, guttering, pipes, cabling, driveways and patios. But also fixed floors and tiles, doors, fitted kitchens and fitted bathroom items such as the bath and sink.
According to the Financial Ombudsman, an item falls under building insurance if it could not be reasonably moved from one property to another. Otherwise, it is classed as contents.
Costs to repair or replace qualifying items would be covered by landlord building insurance if they were damaged by natural causes such as the weather or malicious and criminal events. Incidents usually qualifying for a building insurance pay-out include storm, lightning, flood, earthquake, fire, explosion, theft, robbery, malicious destruction, riot, leaks, civil commotion.
But it is the landlord’s responsibility to make sure the property is maintained to a habitable standard. Insurers won’t honour a claim if the damage is due to negligence or general wear and tear.
Sources:
- https://www.nimblefins.co.uk/business-insurance/landlord-insurance-uk
- https://www.insurancebusinessmag.com/uk/opinion/mind-the-gap-on-contents-cover-112539.aspx
- https://www.insurancebusinessmag.com/uk/opinion/mind-the-gap-on-contents-cover-112539.aspx
- https://www.financial-ombudsman.org.uk/files/2817/30.pdf
