When you buy a house, one of the first things you do is take out insurance. After all, house repairs can be expensive, and in exchange for a low monthly payment your insurance company can cover those large payments for you should the worst happen. The same is true if you’re a landlord, or a tenant. Both sides of the rental agreement could end up out of pocket without the right insurance in place. Thankfully the responsibility for insuring rental properties is split between the landlord and the tenant – and here’s how it works.
What Is the Landlords Responsibility?
Generally speaking, the landlord is responsible for keeping the building and property in good condition and order, as well as any repairs that need to happen to the building or the integral working of the building. This includes things like gutters, heating systems, plumbing, roof tiles and more. This can all get very expensive if it’s done out of pocket, especially if there is an incident of some kind, which is why most landlords will have insurance. In fact, if a landlord has taken out a buy-to-let mortgage for the property, they may have to provide proof of insurance in order to be approved. There are 2 ways a landlord can approach insurance:
- Buildings insurance: This kind of insurance covers the cost of repairing any damage to the physical structure of your property, along with garages, sheds and fences, and the cost of replacing things like pipes, cables and drains. Buildings insurance usually covers loss or damage caused by fire, explosion, storms, floods and earthquakes.
- Landlord insurance: There is also a specific type of insurance for landlords, called landlords insurance. This type of insurance is broader than buildings insurance and will cover landlords against any risks related to their buy-to-let property – including accidental (but not intentional) damage by tenants or loss of rent following a major incident (fire or flood). Different types of landlords’ insurance cover different risks, and depending on your insurer you can choose the type of insurance you need.
If you’re a landlord who’s providing furniture in a property, you may also need contents insurance to cover your possessions within the property.
What Insurance Do Tenants Need?
For tenants, insurance is to cover everything inside the building. In other words, contents insurance. Some rental agreements even require you to have contents insurance in order to rent the property! Contents insurance covers the belongings inside the property, but not the property itself. So, if your home is broken into and your belongings stolen, contents insurance is what covers it. Equally if there was a fire or a flood and your belongings were damaged, you would be able to claim for the cost of repairing or replacing them. You can either opt for standard contents insurance, or you can take out specialist tenant insurance if you want something more tailored. You might also want to consider insurance to cover your rental payments if you lose your job or cannot work for some reason.
So, if you’ve been thinking that contents insurance is a luxury when you’re renting, think again. It’s an essential for keeping your possessions safe and making sure you don’t end up out of pocket.
Ultimately, insurance liability is split this way because it ensures everyone is covered for the things they are responsible for should the worst happen. This means landlords don’t end up paying to replace their tenant’s property, for example, and tenants aren’t on the hook for expensive housing repairs. The exact details of what’s covered by whom – and what insurance each party needs to have – will be detailed in your rental agreement.
At Northwood, we know the insurance industry can be a bit daunting, but it’s our job to make both letting and renting a property as simple and straightforward as possible. That’s why our advisors are on hand to help you understand what you need and how to get it arranged, so you can start the rental process, from either side, in complete peace of mind. If you’d like to know more, just get in touch with the team today.
