Only 45% of renters protect their belongings or liability with an insurance policy, leaving 55% with no insurance during their tenancy. Offering tenants contents and liability insurance is an easy win for letting agents who want to improve their bottom line at a time when letting agents and landlords need to keep a handle on rising costs due to new regulation and the aftereffects of the pandemic.
What is tenants’ insurance?
Landlords should already have some form of insurance cover. This could range from rent protection or legal expenses insurance, which covers unpaid rent or legal fees to facilitate the eviction of non-paying tenants in a worst-case scenario, to contents and building insurance, which covers damage to the contents of furnished properties or the building’s structure.
Contents and liability insurance for tenants provides both the tenant - who takes out the policy - and their landlord with an extra level of protection. Tenants are covered for loss or damage to their personal belongings and accidental damage to the landlord’s property, including their furniture, fixtures, and fittings.
Why is tenants’ insurance important?
Letting agents have a responsibility to their landlord to help them protect their investment, and, in a worst case scenario, a security deposit will only go so far. Security deposits in England are now capped at the equivalent of five weeks or six weeks’ rent under the Tenant Fees Act - not much security for the landlord if their tenants have significantly damaged the property or haven’t paid their rent.
If the landlord has to then make a claim on their own insurance policy, this may result in their premium going up. Terms in the tenancy agreement could help them recover the cost but it still means extra hassle for them and their letting agent.
With tenants contents and liability insurance, if costs to fix any accidental damage surpass the security deposit, the landlord won’t have to foot the bill - and nor will their tenants. The tenant’s policy should cover the cost of any damages, without them having to dip into their deposit. Letting agents can even benefit from commission if they offer a policy: an additional source of revenue.
If the insurance responsibilities are made clear in the initial tenancy agreement and a thorough inventory check is done at the beginning, all signs point to a smooth end of tenancy transition, with happy landlords and tenants. Deposit disputes will be less likely, meaning less admin. The tenant will get their deposit back more quickly, and the letting agent and their landlord can get on with preparing for the next tenancy.
Oh Goodlord Limited is an Appointed Representative of Goodlord Protect Limited for general insurance products and credit broking. Goodlord Protect Limited is directly authorised by the Financial Conduct Authority, registration number 836727. You can check this information on the Financial Services Register by visiting www.fca.org.uk/register or by telephoning 0800 111 6768 (Freephone) or 0300 500 8082 from the UK. The FCA is the independent watchdog that regulates financial services.