Do tenants need insurance?
Renting rather than buying can be seen as a more flexible way of living: you’re not tied down to a mortgage, maintenance is someone else’s problem and it generally means you have less responsibility for the property. But having raised the “r” word, it has to be said that tenancies also carry responsibilities – and there can be risk involved.
The simple answer to the question is yes, tenants do need insurance. It is the landlord’s responsibility to have insure their own contents and and have buildings and liability cover, but don’t assume that this covers any of your possessions or liabilities. In fact, landlords can’t insure their tenants’ property because you can’t obtain cover for something you do not have an insurable interest in. So, at the very least, you need to ensure that you have the correct amount of cover for your own possessions – and that you have the right type of cover. Standard contents insurance typically does not specifically cover all the associated risks with being a tenant but specialist policies are available.
Then you have to think about your landlord’s contents. Even in an unfurnished property, there are fixtures and fittings to consider: carpets, kitchen and bathroom fittings, white goods. As a tenant you have a responsibility for those.
Many, particularly those who envisage only a short tenancy, tend to think of the deposit they pay upfront as a sort of insurance cover for any minor bits of wear and tear that need putting right when they leave. Think about it though: you are probably going to need that money to pay the deposit on your next rental and do you really need the hassle of arguing how much of it your landlord is entitled to retain?
While a landlord can’t insure your possessions, you as a tenant can and should have cover for accidental damage to your landlord’s property that you are responsible for. You may think that you are the careful sort who will take care of the premises, but it doesn’t take a party with Youtube potential to incur accidental damage that could rack up quite considerable costs. Think red wine and carpet.
As an occupier of a property, certain liabilities can fall on your shoulders. If you employ, say, a gardener or a cleaner, you should have employer’s liability cover.
You also need to be aware of circumstances that could invalidate your insurance, such as unofficial sub-letting. From the insurer’s perspective, getting a friend to house-sit for a couple of weeks while you are on holiday would probably be viewed as a sensible risk management measure. Having someone caretaking a property can mitigate damage from an emergency such as a burst pipe as there will be someone on hand to deal with it immediately. The same would not apply if, for example, you were seconded away from home for work for a month or two and decided to sub-let the property to someone in your absence. Quite apart from the implications this could have for your tenancy agreement, from an insurance perspective it would be regarded as an unofficial sub-let and cover could be voided or prejudiced.There are specific risks associated with tenants that don’t apply to homeowners so it pays to look for a specialist insurance policy designed to cater for them. If you are sharing, for example, you can hold insurance in joint or individual names and tenants’ insurance will often include additional benefits such as cover for locks and keys, legal expenses and emergency assistance.
Without insurance, you are essentially gambling with your deposit and your own valuable possessions. And you could very easily find yourself in circumstances where the deposit could be insufficient to cover any costs that the landlord expects you to pay.
Nigel Atkinson, National Business Development Manager and PropertyRisks are on www.propertyrisks.com.