Renting out your property to tenants can be a hassle, and often involves checking off tasks on a never-ending to-do list. The phone calls, back and forth paperwork, and overall bureaucracy involved with leasing out your place to temporary tenants is a minor headache, at best, and a real nightmare, at worst.
That’s why making sure your tenants are fully protected with their own contents insurance is a no-brainer. Think of it as another line of defense when there’s an emergency situation.
How does my tenants’ insurance help me?
When your tenants have their own insurance policy, it’s an additional layer of protection for you, the landlord. When unfortunate things like fire cause damage to your place, their contents insurance policy can help repair the damage, reducing the amount you or your insurance company have to pay.
This keeps your own policy premium lower by reducing the claims on your insurance, and helps you avoid costly legal fees from tenant disputes. And not to mention, it saves you a ton of time!
In addition, contents insurance will help keep your relationship with your tenants healthy, especially when a major damage or loss occurs. With contents insurance, you can avoid disputes over who has to cover costs of damages since your tenant’s contents insurance will include tenant’s liability—covering costs to your furniture in your property.
Oh, and one more perk: Tenants with contents insurance are less likely to sue you to compensate them for a loss.
What does contents insurance cover?
If your tenants choose to purchase a contents insurance policy, they will get three main coverages: contents (personal property), temporary accommodation (also called ‘loss of use’), and personal liability.
Tenants tend to think that since they don’t own the place, they don’t need extra protection for their stuff. That’s a very common misconception, and it’s important tenants know you aren’t liable if a kitchen fire damages their stuff, or if their laptop is stolen. Your landlord insurance doesn’t cover the tenant, or the tenant’s stuff.
Imagine this: A mysterious fire causes extensive damage to your building, displacing your tenants and damaging their stuff. Not only would this cost your uninsured tenants serious money, but they would also likely need to blame someone for this incident, and that blame may fall on you.
In cases like these, your tenants’ contents insurance policies can come to your rescue. It can help pay for your tenants’ temp accommodations, reimburse them for their lost items, and re shift the focus from you, to your tenants’ insurer.
Let’s be honest: There are many situations where personal liability cover comes in handy. Let’s say your tenant hosts a party and someone slips and falls, or their neighbour comes over to help make dinner and cuts their finger while chopping the salad.
Contents insurance policies include personal liability cover, so if someone claims to be injured due to your tenant’s actions or negligence, their contents insurance may cover legal fees, and may also pay to cover damages they’re found liable for.
Personal liability can make a huge difference if legal bills and medical fees start racking up! So, if your tenant unfortunately caused damage not only to your property, but to other units in the building, they’ll be in a costly bind.
Here are some of the benefits of contents insurance you should make sure your tenant understands:
Contents insurance is affordable
A common misconception about contents insurance is that it’s pricey. Be sure to communicate to your tenants that the average cost of contents insurance is probably lower than they think, and that a very basic contents insurance policy can cost as little as £4 a month (thanks to the help of AI). Most policies allow you to customise your cover to fit your lifestyle needs, so contents insurance doesn’t have to be a significant out-of-pocket expense.
For example, if you are covered with Lemonade, you can adjust your cover at any time and choose the amount of cover you’d like, which in turn will influence your monthly premium (the amount you pay each month for your contents insurance policy).
Contents insurance covers the tenant’s family
A contents policy may cover others living with your tenant, too. If your tenant is living with anyone related to them by blood, marriage, or adoption, they’ll automatically be covered by the tenant’s contents insurance policy. They’ll just have to make sure to get enough cover for everyone.
They can determine just how much cover they need when they add other people to their policy. If they’re living with their significant other (who they aren’t married to), they’ll need to be added to the policy as what’s called an ‘additional insured.’
Dog bites, check
If your tenant has a dog, and you were wondering, “does contents insurance cover dog bites?” you’re in luck. If your tenants’ dog bites someone, their liability policy has them covered.
Their cover applies both when they are at home or at the park (and anywhere in between).
There is an exception though: If the dog is categorised as high-risk as described under the Dangerous Dogs Act 1991 or the Dangerous Dogs (Northern Ireland) Order 1983.
Help your tenants help you
And that’s just a part of the benefits of contents insurance for your tenants. You can be an even better landlord if you help them figure out how much contents insurance costs. Everyone’s needs are different, so be sure to help ‘em figure out what kind of cover their lifestyle requires.
Part of figuring out how much cover your tenants need is determining how much their stuff is worth. It’ll help them ensure their coverage amounts reflect the real value of their stuff.
Contents insurance is good for both you and your tenants. Even if you’re not up to making it mandatory in the contract, suggesting it to them and walking through the process can build trust and a good landlord and tenant relationship.
Ultimately, your tenants will thank you, their landlord, and you’ll have your own peace of mind.