Quick answer: what is landlord contents insurance?
Landlord contents insurance protects the items owned by a landlord inside a rental property, such as furniture, appliances, carpets and curtains provided for tenants’ use. It differs from buildings insurance, which covers the structure of the property itself. The precise protection available will depend on the policy wording, but cover commonly includes risks such as fire, escape of water, storms and theft. Landlord contents insurance does not cover tenants’ personal belongings.
Let property insurance may typically offer buildings insurance with the option to add on landlords contents insurance.
If you’re a landlord, it’s vital to know who’s responsible for what – you or your tenants. One area for potential misunderstanding, for example, is the distinction between the contents you own in the let property and those belonging to your tenants. The distinction is important – especially when it comes to your respective responsibilities for insurance.
This article may help to explain those differences in greater detail and clarify any lingering misunderstandings.
What is landlord contents insurance?
As we said above, landlord contents insurance protects the items owned by a landlord inside a rental property. This may include furniture, appliances, carpets, curtains and other furnishings provided for a tenant’s use.
In practically any let property, the landlord is almost certain to own at least some of the contents – even if this is little more than some curtains, carpets, and the occasional piece of furniture. Tenants’ belongings account for the remainder of the contents.
So, let’s see how this distinction shapes landlord contents insurance …
Definition and purpose
- contents insurance for landlords is typically designed to safeguard the items owned by the landlord in a let property;
- the insurance may provide protection against loss or damage to a wide range of possible items that include furniture, white goods and appliances, soft furnishings such as carpets, curtains, and blinds, and items in any communal areas (in a block of flats or an HMO, for example);
How it differs from buildings insurance
- whereas landlords buildings insurance safeguards the structure and fabric of the building (its walls, floors, roof, and so on), landlord contents insurance protects those moveable items owned by the landlord in the let property;
How it differs from tenant contents insurance
- quite simply, tenant contents insurance protects tenants’ belongings, landlord contents insurance protects the contents owned by the landlord;
- in other words, tenants’ contents insurance covers only the tenants’ belongings – the insurance of items owned by the landlord remains the landlord’s responsibility.
What landlord contents insurance typically includes
Landlord contents insurance generally covers items provided by the landlord for the tenant’s use within the property. This may include furniture, white goods, carpets, curtains and other furnishings.
Policies commonly cover damage caused by insured risks such as fire, storms, escape of water and theft. The precise list of insured events will depend on the individual policy and its terms and conditions.
Some insurers may also offer optional cover extensions, such as protection against accidental damage or malicious damage caused by tenants or their visitors.
This type of rental property contents cover might help protect against damage or loss to those items you have provided for your tenants’ use – damage to the sofa in the sitting room, let’s say, or for the repair of a broken washing machine, or to clean carpet stains. The outcome of any such claim, of course, depends on the causes of the loss or damage and the precise wording of your particular insurance policy.
What landlord contents insurance usually does not include
When you consider any kind of general insurance, it is as important to know what is not included – what is excluded – just as well as what is. Although any exclusions will vary from one insurer to another, these are some of the events and incidents that are not included in the typical landlord contents insurance policy:
Tenants’ personal belongings
- it’s worth saying again – landlord contents insurance is for items owned by the landlord, while tenants’ personal belongings need to be covered by tenants’ contents insurance alone;
- landlord contents insurance and tenants’ contents insurance do not mix;
Wear and tear
- in keeping with practically every other form of general insurance, contents insurance for landlords excludes normal wear and tear;
- wear and tear is a natural, ongoing process, to be distinguished from sudden, unexpected loss or damage;
Gradual deterioration
- gradual deterioration is similar to the natural, ongoing process of wear and tear;
- once again, the gradual process is distinguished from the sudden, unexpected loss or damage typically covered by contents insurance for landlords;
Deliberate damage
- typically, damage caused by deliberate action or actions is excluded in these types of insurance policies;
- an exception may be gained by accepting what is usually an optional element of cover against malicious damage committed by your tenants or their guests;
- this component of cover may be in addition to a further option included as accidental damage landlord insurance;
Do you need landlord contents insurance if the property is unfurnished?
Even in an unfurnished rental property, a landlord may still own certain items within the property. These might include floor coverings, blinds, kitchen appliances or other fixtures and fittings.
Landlord contents insurance may help protect these items against certain insured risks, depending on the policy wording.
Whether you choose to arrange protection for your contents is more likely to depend on your appetite for risk and the value of the contents themselves.
How much landlord contents insurance is appropriate?
If there is a case for arranging landlord contents insurance, how much cover is appropriate?
Replacement cost vs market value
- contents insurance is designed to restore you to the same position after an insured event as you were before it (less any policy excess);
- the aim, therefore, is to arrange sufficient cover for the cost of replacing lost or damaged items – that is, the replacement cost and not the current or future market value of those items;
Creating and maintaining an inventory
- to maintain an accurate assessment of the total replacement cost of the whole of your contents, therefore, you may need to create and keep up to date a detailed inventory of items;
Avoiding underinsurance and the average clause
- the total contents sum insured is the maximum amount your insurer may pay out by way of the settlement of a claim – if you are underinsured, you may be unable to replace all of your lost or damaged items;
- contents insurance for landlords typically invokes an “average clause” if your contents are underinsured because the cover is less than their true replacement cost;
- this may reduce the amount of any settlement in proportion to the amount of underinsurance – even if the losses claimed are only partial.
How to help manage the cost of landlord contents insurance
As with many other types of property insurance, the cost of landlord’s contents insurance depends on an insurer’s assessment of the risks involved and the company’s particular underwriting. That assessment may reflect the type of property that is let, the form of tenancy, the neighbourhood, and its location.
For landlords keen to manage the cost of their contents insurance, attention to the security of the property may be viewed favourably by some insurers when assessing risk.
Maintenance of the property in a good state of repair may be a given, but regular schedules for repairs and maintenance may provide further commitment to care for the let property and its contents.
If you are prepared to assume a greater share of the risk, it may, in some cases, be possible to accept a higher level of excess in return for potentially a slightly lower premium.
Combining your landlord buildings and contents insurance cover into a single policy may also achieve savings.
Checklist: what to look for in a landlord contents policy
When choosing landlord contents insurance, it is important to review both the cover provided and the policy conditions.
Landlords may wish to check the total sum insured, limits for individual items, any exclusions, and whether optional cover such as accidental damage or malicious damage is available. It is also sensible to understand the insurer’s requirements around unoccupancy, security and claims procedures.
Reviewing the policy wording carefully can help ensure the cover reflects the needs of the property and the contents provided.
When comparing the many landlord contents insurance packages on the market, you are likely to be in search of the cover that suits the particular needs and circumstances of your buy to let business.
Are there clear limits to the overall cover provided by a particular policy, for example, and do these fairly reflect the insured limits on single items? In addition to risks covered, are the policy’s exclusions also clearly defined?
When comparing the nature and extent of the protection offered, have you considered whether the policy includes options covering accidental damage and malicious damage?
What are the limits to unoccupancy? Typically, your let property will be regarded as unoccupied once it has been vacant with no one living there for between 30 and 60 consecutive days – but the precise interval may vary from one insurer to another. Further reading: Guide to unoccupied property.
Finally, if the worst should come to the worst, has the advertised policy set out a transparent and easy to follow claims process?
Let us help you
Even if your property is let as unfurnished, you might recognise a need for landlord contents insurance. In that case, it is important to read, understand, and review any such policy wording carefully to ensure that it meets your precise needs and circumstances.
If you remain unsure or need further advice from specialists with particular experience of all kinds of insurance for landlords, do not hesitate to contact us here at Cover4LetProperty – we’re here to help.
