The importance of the right insurance is widely understood, but many private landlords don’t realise that a standard homeowners’ insurance policy often doesn’t provide sufficient coverage when a property is being rented out. And that, of course, brings risks. Because what if the tenant causes damage to the property? Or what if you temporarily lose rental income due to fire or water damage?
In this blog, we explore why having the right insurance matters, which policies you need as landlord (or tenant) and how to avoid unexpected costs that could eat into your return. Whether you’re renting out a room, an apartment or an entire home – being property insured is not a luxury, but a necessity.
General principles
In general, both landlord and tenant are responsible for insuring their own property. For example, the tenant is not responsible for insuring the building against storm damage, as the property doesn’t belong to them.
Insurances for landlords
The most important types of insurance for rental properties are:
Building insurance covers damages to the fixed parts of the property, such as fire damage, storm damage or water damage. It includes all structural elements of the home such as walls, roofs, kitchens and bathrooms but also outbuildings like sheds, garages and garden houses. Sustainable installations such as solar panels, EV charging stations and heat pumps are also covered.
Liability insurance covers financial damages for which you are held legally responsible. This includes personal injury and property damage – for example, a loose roof tile falling on a car or a faulty handrail causing a tenant to fall and suffer an injury. In many cases, legal proceedings may follow if someone holds you liable. Many liability insurance policies also cover legal defence costs.
Contents insurance covers damages to your personal belongings in the property – such as furniture, appliances and other moveable items. If you are renting out a furnished property, it’s important that the furniture is insured against damage caused by fire, water or theft. Even when renting out a unfurnished property, contents insurance is recommended. Items such as curtains or floating laminate flooring are considered contents (and not a fixed part of the property) and are therefore not covered by building insurance.
Insurances for tenants
For tenants, it’s advisable to insure personal belongings in the home through a contents insurance policy. A liability insurance policy is also recommended. However, it’s important to note that a tenant can almost never claim on their liability insurance for damages to or within the rented property caused by their own actions.
Important
It’s important to emphasize that not all standard insurance policies cover rental situations. You must explicitly notify the insurer that the property is being rented out (furnished) to ensure the right insurance policy is in place. In some cases, a separate rental insurance policy is required. Seek professional advice – having the right insurance not only provides financial protection but also peace of mind should something go wrong. And that peace of mind is worth it’sweight in gold.
