In the following article, insurance expert Andres Konsap gives an overview of the most important questions and topics related to insuring a rental apartment and explains how to choose the most suitable solution.
Among other things, you will find out the following:
Should you insure your rental apartment?
What is home insurance?
What is the protection of Rendin?
Comparison between the protection of Rendin and home insurance
Who has to insure a rental apartment?
1. Should you insure your rental apartment?
Every landlord should have both home insurance for a rental apartment and the protection of Rendin.
‘From time to time, landlords come to us asking if using Rendin means that the owner can opt out of home insurance. The reason given is that they do not live there anyway,’ says Andres Konsap, Chief Insurance Officer at Rendin. ‘We do not recommend making such a decision under any circumstances,’ he adds.
The protection of Rendin and home insurance are different in nature. ‘Yes, both of them are there to help the landlord, but in different situations. In summary: the protection of Rendin and home insurance serve different purposes,’ stresses the expert.
What is home insurance?
Home insurance protects the owner’s home and its contents in the event of unexpected and unforeseeable circumstances, such as fires, water damage, storms, floods, vandalism, burglaries, etc.
In the case of a detached or terraced house, the home insurance covers the entire building, the interior fittings, built-in/fixed furniture, etc. In the case of an apartment building, it is the responsibility of the apartment association to insure the building, but it is up to the owner to insure the interior of their apartment, the assets in their home, and their deductible.
Home insurance does not cover cases of gross negligence and wilful misconduct (from which the landlord is protected by Rendin). It also excludes incidents caused by long-lasting natural processes such as mould, rot, etc.
Konsap explains that the exact content of the package will depend on the product of the insurance provider and the type and level of protection that customers want for their assets. ‘Home insurance providers are exemplary in keeping up with the times and constantly adapting their products to meet the evolving world and the growing needs of their customers.’
He cites the example of some providers also offering protection for technical equipment (e.g. heating, cooling, and ventilation) that is up to seven years old. The protection also applies to internal failures. ‘No one is directly to blame if a device stops working after the warranty period. In that case, it is worth contacting your home insurance provider to claim compensation.’
What is the protection of Rendin?
When a landlord enters into a secure agreement with their tenant on the Rendin platform, it automatically comes with a certain level of protection for both parties:
Guarantee of rent and utility payments for the landlord (3 + 3 months)
Property protection for the landlord (10x the rent)
Renting without a security deposit for the tenant
Legal support for both the landlord and the tenant
‘In the case of the protection of Rendin, it does not matter whether the damage caused to the landlord by the tenant’s actions was intentional or accidental; whether the damage was caused by the tenant themselves, a guest, a child, or a pet,’ says Konsap. ‘At the same time, Rendin does not provide cover if the tenant has caused damage to a third party – only the liability insurance of home insurance provides such a cover,’ he explains.
Important to know: above all, the tenant is responsible for all of their actions. The service of Rendin is not an analogue of liability insurance; rather, it could be described as a guarantee-like solution.
If the tenant causes financial damage to the landlord by defaulting on rent or utility payments or by damaging the property in the rented accommodation, we assume that the tenant is able to compensate the landlord for the damage.
If the tenant refuses to compensate the landlord for the damage, Rendin will do so, and a recovery claim will then be submitted to the tenant.
When problems arise, our aim is to reach the best possible compromise between the tenant and the landlord. In the event of rental damage, if the parties are cooperative, we are willing to offer flexible options for compensation. This also applies when a recovery claim has been submitted.
For example, a tenant in serious difficulty can repay the debt over a long period of time, deferred, and interest-free.
Comparison between the protection of Rendin and home insurance
In short, the protection of Rendin and home insurance have different functions. They are not substitutes for each other, but complementary – the table below shows how.
Rendin | Home insurance with liability insurance | |
Rent and/or utility arrears of the tenant | ||
Property damage caused by the tenant | ||
Other unexpected event (accident) | ||
Causing damage to a third party (e.g. neighbours) |
2. Who has to insure a rental apartment?
The risks of owning a property are the responsibility of the owner, so it makes sense for the landlord to be the one to take out home insurance. The fact that a tenant lives in the apartment is not an argument for not taking out home insurance. However, it is important to let the insurance company know of that, as many companies also offer additional rental insurance cover.
‘Regardless of the residents, their diligence, or other circumstances, many incidents are simply accidents that are almost impossible to foresee or prevent. For example, water accidents, fires, burglaries, etc. In the case of accidents where the tenant is not liable for the damage, the tenant is not obliged to pay for the damage,’ says Konsap.
‘There is more. If no home insurance has been taken out and the accident that started in the flat causes damage to neighbouring flats, it is likely that the owner of the flat will be asked to pay compensation through the courts,’ he warns.
In any case, the monthly premiums are many times lower than the cost of restoring your neighbours’ property after an accident.
3. Rental property in an apartment building needs liability insurance
Liability insurance can be added to your home insurance to protect against damage caused to a third party. The insurance expert stresses that this is particularly important for occupants of apartment buildings. ‘You are surrounded by your neighbours and their activities. And it does not matter whether it is a rental apartment or the owner’s own home,’ says Konsap.
He gives a classic example of the multi-faceted role of liability insurance. ‘Let us say a pipe bursts in your rented flat. There is a major flood, which reaches the lower floors. If your neighbour’s flat is damaged, your insurer will pay for it – on your behalf.’
Exactly the same applies if a similar accident happens in a neighbour’s flat, causing problems on your property. ‘Then, the neighbour’s liability insurance will compensate for the damage. If your neighbour is not insured, your own insurance will compensate you for the damage, and will later recover the loss from the person who caused it,’ says the Chief Insurance Officer of Rendin.
If the owner of the property decides not to take out liability insurance, it should be borne in mind that the consequences of such accidents will have to be paid out of pocket. In large-scale cases, we are talking about tens or even hundreds of thousands of euros.
What is liability insurance?
Home insurance combined with liability insurance provides protection against damage caused to third parties. In the event of an accident, the insurer restores the living spaces and property of the victims – usually the nearest neighbours – to their original condition or compensates for their value.
There is also a variety of liability insurance solutions available from insurers, such as extended liability or pet owner’s liability. This means that if the person, their family member, or their pet causes damage away from home, the insurance will cover it.
4. You should think through the appropriate amounts of insurance cover
As people’s wishes and expectations of their insurance cover vary somewhat, the first thing to consider is what is most necessary from this perspective. ‘Some people want to focus on equipment-related protection, while others consider it important to protect their neighbours from damage,’ says Andres Konsap.
To make the best decision, it is worth first looking at home insurance providers and their terms and conditions. Then, specialists can be consulted.
According to the expert, there are a few good rules of thumb that every owner of a home or rental property can follow:
The higher the building or the floor, the greater the liability insurance cover. If the apartment is higher up in the building, it increases the likelihood of damage to several neighbours in addition to yourself.
Simple examples of this are a water accident, which can result in water reaching several floors below the source, or a fire that damages both upstairs and downstairs neighbours as smoke, soot, and extinguishing water spread almost everywhere.
The minimum amount of liability insurance should be at least €10,000 per floor. If you decide to increase your liability insurance on the basis of this recommendation, know that your monthly premium will only increase by a few euros.
Choose protection against property damage according to the value of the property. To do this, make an estimate of how much the assets at your home might cost. This includes everything that is not built in or fixed, including loose furniture and equipment, as well as other items such as clothes and sports and leisure equipment. If there is anything exclusive in the dwelling, such as valuable works of art or sports or hobby equipment that is more valuable than average, these should be discussed separately with the insurer.
Choose your deductible according to your means. The deductible is often set as low as possible, because people only think about small losses and argue that otherwise, there is no point in having insurance. In fact, the focus should be on hedging large risks.
If your home and most of your belongings are destroyed, it no longer matters whether the deductible is 100 or 300 euros. However, this has a noticeable effect on the home insurance premium, because the higher the deductible, the lower the monthly or annual premium.
Reporting an insured event is not rocket science
In the event of damage, it is a good idea to contact your insurance provider first. The procedure has been made easy for customers, as the damage is reported online, usually by filling in a short form on the website of the insurance company.
On the basis of the information received, the insurance company will take action: they will send a construction partner to the site to assess the damage and make a quote for the work needed to restore the property. The insurance company must then approve the offer so that the partner can carry out the repairs. There is usually also the possibility that the owner of the property will opt for financial compensation and carry out the repairs themselves.
Choose rental agreement
with Rendin protection
Which cases reach home insurance?
Lia Siht, Head of Legal and Compliance at Rendin, shares the types of insurance cases our landlords/tenants have faced. These are not cases that were compensated by the protection of Rendin. These have been entirely home insurance-related accidents.
‘Sometimes, people have developed certain misconceptions. A home insurance type of case is something Rendin is expected to deal with,’ admits Siht.
‘In such cases, we listen to the explanation of the landlord or tenant of what happened, ask them about their home insurance, and refer them to the insurance provider,’ she explains, stressing that there is nothing complicated or time-consuming about reporting a loss and cooperating with the insurer.
Flooding without anyone knowing
One type of home insurance cases is where an accident occurs without anyone being present. This can exacerbate the severity of the situation and increase the damage, as no one is aware of what is happening.
‘Quite recently, we came across a situation where the tenancy between the parties ended and the tenant moved out of the apartment, but the landlord had some repairs done before the new tenant arrived,’ says Lia Siht. ‘When the builders left, the toilet was unfortunately left running in the bathroom, which resulted in a major flood. It was only days later that the owner found out what had happened in their apartment,’ Siht shares the background of what happened.
Fortunately, there was home insurance to cover the damage.
A fire as a very large-scale accident
Whether it is an apartment or a private dwelling, fire is extremely destructive. It spreads quickly and causes a lot of damage (including rescue work), and it is costly, both financially and emotionally.
If the person responsible whose dwelling was the source of the accident has a liability insurance with a decent amount, then all the neighbours’ apartments can be repaired. The situation is different, of course, if there is no liability insurance at all or if its amount is too small.
With this example, everyone should be aware of the need to protect themselves – as well as others – from the unexpected.