Insurance 101 for landlords and tenants

Whether you’re a landlord or a tenant, insurance is an important consideration that shouldn’t be overlooked.

No. 4729 from our magazine|2 min read| Published in Magazine on 21 May 2024 by our Marketing Team

Let’s look at the essentials of landlord and tenant insurance, why it’s important, and which types of coverage are available for your tenancy.
Do tenants need home insurance?
There is no legal obligation to take out tenants’ insurance unless it’s a requirement in your tenancy agreement, but this doesn’t negate its importance.
While it can be tempting to avoid the extra cost of insurance, you could lose valuable protection if you opt out of coverage for your home.
Landlords are responsible for insuring the property itself, but tenants are responsible for insuring their personal belongings. Here’s what tenants should consider:
Contents insurance
Just like landlords, tenants can benefit from contents insurance to protect their possessions against risks like theft, fire, or damage.
Tenants’ liability insurance
This covers your liability for accidental damage to the landlord’s property. It’s usually included as part of contents insurance, but it’s worth double-checking.
Tenant’s improvements insurance
If you’ve made improvements to the property with the landlord’s permission, such as installing a new kitchen or bathroom, this insurance can cover the cost of repairing or replacing these improvements, in case of damage.
Do landlords need insurance?
Landlord insurance is also not legally mandatory unless stated in the conditions of your buy-to-let mortgage, but it is highly advisable for many reasons. Owning a rental property comes with the risk of financial setbacks, both minor and major, so insurance is a vital safeguard that is well worth the extra cost.
Building insurance
This covers the structure of the property against risks like fire, flood, storm damage, and vandalism. It’s essential to ensure your policy covers the cost of rebuilding, not just the market value.
Contents insurance (furnished properties)
If you rent out a furnished property, contents insurance can cover the cost of replacing or repairing items like furniture, appliances, and fixtures in case of damage or theft.
Liability insurance
This protects you from legal claims made by tenants or visitors for injury or damage to their property due to negligence on your part as the landlord.
Loss of rent insurance
In the unfortunate event that your property becomes uninhabitable due to damage covered by your policy, loss of rent insurance can provide compensation for the rental income you lose out on during the repairs.
Legal expenses cover
This can cover legal costs associated with disputes with tenants, such as eviction proceedings or rent arrears recovery.
Shared responsibilities
Landlords and tenants have different insurance responsibilities, and the extent of coverage is at their individual discretion depending on either mortgage terms or the terms in the tenancy agreement. Effective communication is crucial for ensuring adequate protection for all parties involved. Landlords should clearly communicate what is covered by their insurance policy and any expectations they have of the tenant regarding insurance. Tenants, on the other hand, should inform landlords of any changes or improvements they make to the property to ensure they are adequately covered.