Does Home Insurance Cover Contents if Rented Out?

Caeva O'Callaghan | March 9th, 2021

If I Rent Out A Furnished Apartment Will All My Contents Automatically Be Covered By Insurance?

You may include furniture and fittings in your apartment leasehold. But does this affect your home insurance? And do you need to add your tenants’ belongings to your contents policy?

No. Your home insurance contents policy will only cover items belonging to you, the landlord. If you rent out an apartment which is fully or part furnished, your home insurance will cover items which you own.

Your tenants will need their own tenant’s contents insurance in place to cover the furniture and other items they bring into the apartment.

In this article, we’ll cover questions such as:

• What home insurance do I need as a landlord?
• If I rent out my apartment, what insurance do my tenants need?
• Will fixed appliances have cover under my contents insurance?

It’s a good idea to advise your prospective tenants on what insurance they will actually need, before they move in.

Home insurance for landlords

When you’re a landlord, you need a bit more cover than your standard buildings and contents home insurance. After all, renting out an apartment you own to someone else will involve risks that normal home insurance won’t cover.

Landlords’ insurance covers you for the basic home insurance risks, as well as others only landlords face. These could include key loss, accidental damage cover and third party liability.

If you buy a property with the specific intention of renting it out, you’ll need a buy-to-let mortgage. Many lenders will not give you one unless you have landlords’ insurance, which covers a landlord from financial losses connected with the rental property.

For example, landlords’ insurance will typically include:

• Cover for third party claims
• Rehousing tenants or paying for lost rent after an event like a flood or fire
• Fire brigade charges
• Door lock replacement
• Escape of water

If you rent out your apartment fully or part furnished, you will also need contents insurance to cover those possessions you own. If you do not have this cover in place, you will be paying out of pocket for their repair or replacement in the event they are lost or suffer damage.

Your contents insurance needs to cover everything that you, the landlord, supply as part of the lease. This means any furniture you include, any upholstery and other contents.

Home insurance for tenants

Landlords have no insurable interest in their tenants’ belongings. If a fire or flood happens, it is not a landlord’s responsibility to repair or replace anything that isn’t theirs.

Before moving into a part or fully furnished apartment, tenants always need to have contents-only cover in place. This will protect their belongings, and their belongings only. If you are a landlord, it’s a good idea to make having a contents insurance policy in place part of your lease agreement, to avoid future headaches.

The distinction is perfectly clear: you need to each insure what you own. But what constitutes “contents” in the first place? Use this general rule of thumb: if you turned your apartment upside down, what would fall out? Everything that’s permanently fixed is part of the buildings cover you need to have when you become a landlord. Everything which falls out is the contents.

Therefore the kitchen sink and windows fall under buildings. Any integrated appliances actually fall under contents, even though they’re affixed firmly in place, because they’re very easily swapped out. If you include appliances like these in your lease, it’s a good idea to include these in your policy, too.

Tenants’ improvements

Of course, sometimes there are grey areas. What happens when a long-term renter makes significant improvements to your property over the course of their residency? As a landlord, is it still your responsibility to insure it?

Of course, you may not object to your long-term tenant installing a new bathroom or replacing the hallway floor. But, where does that leave you insurance-wise?

Certainly, if your tenant is making the investment, the compensation should go to them if a fire or flood happens. Although you, the landlord, own the building, you were not responsible for the modifications and you did not pay out of pocket.

In this case, you should advise your tenant to take out additional insurance before commencing the works. Their provider may be able to offer them a “tenants’ improvements” add-on to their contents policy. This will cover any building works they have made over their tenancy. It will include such improvements under contents and, most importantly, it avoids arguments if the worst should occur.

If you are renting your property, talk to us about the various options available?

If you are renting out any properties, feel free to give us a call and we can advise you on what landlords insurance you may need as a landlord. We can also help you advise your tenants before they move in. We are available to talk anytime Mon-Fri between 8.30am and 5.30pm on 0818 224433 or 042 9359051. We look forward to helping you today!