Tenant’s insurance, also known as renter’s insurance is a type of insurance that is specially designed for tenants renting a property. It combines both contents insurance and liability insurance.
Tenant’s contents insurance
Tenants often assume that the landlord is responsible for all insurance because he or she is the owner of the property and therefore will have insured all of it as part of the conditions of obtaining a mortgage or in order to protect its value.
However, landlord’s building insurance usually just covers the structure of the property (the walls) and the fixtures and fittings (such as the windows). Such policies are unlikely to include cover for contents (such as your personal possessions) and certainly not beyond a low value.
If you are a tenant, understanding what is covered by the landlord’s insurance (or rather what is not covered) is important.
To give a simple example, if a water pipe bursts and water damages your mobile phone, then the landlord’s building insurance should cover the repair of the pipe and of the wall but not of your phone.
A more complicated example might be that the result of the water pipe bursting is that the boiler also fails, which then requires the tenant to heat the property using expensive electric heaters until the boiler is repaired.
Whether the cost of the additional heating is covered by the landlord’s insurance when it is the tenant who pays for the electricity will depend on each policy.
Tenant’s insurance is not a statutory legal requirement, but the landlord may recommend some basic level of insurance. It provides some recourse if the tenant’s personal belongings are damaged or stolen.
Most contents insurance policies cover damage caused by earthquake, fire, floods, explosions and theft. However, it is unlikely that a policy will cover for normal wear and tear or acts of terrorism. Some policies provide one-off accidental damage cover, for example, if you stain a carpet, but there is usually a limit to the value.
Taking out insurance on personal belongings is the tenant’s choice. The landlord should not compel a tenant by making insurance a term of the tenancy agreement. Rather the landlord should make it clear that contents are not covered under his or her insurance and then leave the decision to the tenant.
Tenant’s liability insurance
In contrast, liability insurance covers accidental damage that the tenant does to the fabric of the property.
Although the landlord carries building insurance, the tenant is still legally responsible for accidental damage such as leaks as a result of not turning the water off before going on holiday, burns to the surfaces of kitchen worktops, and stains as a result of spilling liquids on carpets.
Tenants often believe that the security deposit pays for this damage. It does, but the tenant’s liability to the landlord is not limited to the value of the security deposit. The tenant may be required to pay much more.
Tenant’s liability insurance reduces the risk of the tenant losing any of the security deposit. However, it usually still does not cover accidental damage as a result of negligence.