Landlords who rent out their properties are obligated to insure the property has adequate buildings insurance cover, while the tenant, who would typically furnish the house with their own personal items, is responsible for their own household contents insurance.
This is according to Karen Rimmer, the head of distribution at PSG Insure, who explains that despite landlords no longer occupying the home themselves, they remain obligated to insure the property as tenants cannot legally insure the house or apartment for buildings insurance.
Rimmer said before landlords rented out a house or apartment to a tenant, it was important that both the landlord and tenants understood the key obligations of both the tenant and landlord when it comes to insuring the rental property.
Landlord vs tenant insurance obligations: a fundamental principle
According to Rimmer, to understand how insurance works in terms of the landlord-tenant relationship, people need to remember that they can only insure a property or asset that belong to them, or things they have an insurable interest in.
“In a practical sense, this means that tenants cannot be responsible for taking out and paying building insurance, given that the financial consequences of any damage or destruction would not fall on them,” Rimmer explained.
Therefore, the responsibility of the buildings insurance falls squarely on the property owner to ensure that they have adequate insurance to protect their asset.
According to Rimmer, the cost of household furniture, movables and the contents of a home is (in most cases), should be covered by the tenant.
The tenant is responsible for both the protection of these belongings and replacing or repairing any of those assets in the event of theft, burglary, accidental damage and other risks.
This means that tenants need to take out comprehensive home contents insurance to protect themselves and their assets.
Important considerations for landlords
Landlords that are renting out houses or stand-alone structures, need to ensure that the insurance product they choose is comprehensive enough to cover multiple risks.
Some of the most common risks to insure against include:
– natural disasters
– fire
– lightning
– heavy wind
– floods
– earthquakes
– burst geysers
“Sectional title buildings and the insurance thereof will cover residential sections and common property for their full replacement value in the event of unforeseen incidents such as earthquakes, fire and flooding. Sectional title insurance only covers the ‘immovable’ sections of common property and excludes any movable contents,” Rimmer said.
Landlords should also need to consider public liability cover that will provide compensation for any person who gets injured or dies whilst on the premises, and where the owner is held legally liable.
This cover excludes injuries that are due to negligence on the part of the landlord to adequately maintain the structure. An example of this would include injury caused by improperly maintained staircases.
However, tenants are responsible to ensure that landlords are notified of any maintenance issues in advance
Traditional insurance policies do not cover intentional harm, willful destruction or vandalism perpetrated by tenants, commonly known as malicious damage.
In these cases, landlords would need to pursue a civil claim against the tenant and follow any due legal processes.
What tenants need to remember
A tenant’s main responsibility relates to protecting their own belongings and the contents of the property. They can do this by taking out a household contents insurance policy.
Some insurance providers may need tenants to provide a comprehensive list of their possessions as well as their value in order to streamline the process should a claim need to be filed.
Rimmer said: “However, this process would not be applicable should the policyholder own all of the contents. Insurers may also include an additional clause within this policy to provide cover for portable possessions such as jewellery, laptops, mobile phones and other valuables that may leave the property at certain times.”
According to Rimmer, tenants should also take out tenants’ liability cover, which will protect them against unforeseen instances such as accidents, injury or death that may occur while someone is visiting the property that they are renting.
The role of insurance advisers
For landlords and tenants, insurance advisers are an important source for expert advice on how to protect assets in the most comprehensive and cost-effective ways possible.
Advisers can help their clients obtain the most suitable coverage for their specific needs.
Rimmer said: “By outlining what each party is responsible for and advising on the necessary insurance measures, advisers can provide much-needed assurance to clients that they will be fully compensated in the event of an unforeseen incident.”
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