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Home insurance won't guarantee tenancy relations

17.03.2022

 Home insurance won't guarantee tenancy relations

The more new landlords enter the market – the more confusion arises as to exactly which solutions protect the tenancy between the parties. Having an accurate rental agreement and home insurance is part of a basic level of hygiene, but these aren't helpful in every situation. It means that the tenancy must be insured separately.

The reason is simple: each element has a function. Properly drafted and legally competent rental agreement – determines general terms, rights, and obligations for both parties. Home insurance covers damage in case of accidents and vandalism. Home insurance with liability insurance covers the damage costs if a third party (e.g. neighbour) is affected. Tenancy relations insurance protects the homeowner if the tenant has caused financial or property damage through fault.

Home insurance helps to save thousands

Home insurance combined with liability insurance is crucial for absolutely all homeowners. Unfortunately, many homeowners still do not have it, as it is a voluntary product, not a compulsory one. Worth to remember: if there is no home insurance and an accident happens on the property unrelated to the tenant, the responsibility falls solely on the owner. It can be about an outdated washing machine, fire or a pipe failure.

For example, natural depreciation is a common situation. When a standpipe is really old, it causes a flood in a person's apartment, and it spreads to the neighbours' apartment. The damage is likely to be thousands of euros, but this is covered by home insurance liability. If a person doesn't have it, they will be responsible for their own losses. Also, the neighbours or their insurers can make claims against the person whose place caused the problem. Things might end up in court as well to get the compensation.

Tenancy insurance helps there where home insurance's power ends

Another crucial component for the landlord is securing the relationship of tenancy. "Around one in three landlords we interact with are at first confused and don't comprehend why the tenancy needs to be insured and why home insurance doesn't cover it," says Lia Siht, the Head of Legal and Compliance at Rendin. "If the tenant has payment issues, i.e. doesn't pay the rent and utilities or intentionally/unintentionally damages the property on the living space, then tenancy relations insurance can help instead of the home insurance," explains Siht.

In case of problems, Rendin seeks to find a compromise. If the tenant isn't cooperative and doesn't compensate for the damage, Rendin will take the lead and take over the problem. First, the landlord gets compensation for the damage and then a claim is made against the tenant. If the tenant fails to comply, the next step is going to court. It'll be handled by Rendin's experts.

Lia Siht stresses that as soon as the first problems arise, it's a good idea for the landlord to keep Rendin in the loop and, if necessary, ask for advice or assistance (e.g. drafting evaluation reports, explaining rights and obligations). If the landlord discovers any issues, the tenant should be informed, too. "The landlord should compile evidence so that the evidence base is solid. It starts with signing the rental agreement accompanied by a handover act. The handover act has to have up-to-date pictures to illustrate the property's condition. In this way, it's possible to compare the before-and-after state of the residence and assess the extent of the property damage," says Siht. She adds that claims must be truthful and have a reason. It's not a place for playing around.

The classic problem with a tenant usually concerns arrears. For example, the tenant fails to pay the rent, and two payment deadlines have already passed (it doesn't matter whether the bills are unpaid in total or partially). The tenant receives a written notice that they have to pay the debt within two weeks or otherwise, the rental agreement will be terminated.

The classic problem with a tenant usually concerns arrears. For example, the tenant fails to pay the rent, and two payment deadlines have already passed (it doesn't matter whether the bills are unpaid in total amount or partially). The tenant receives a written notice that they have to pay the debt within two weeks or otherwise, the rental agreement will be terminated. If the tenancy is terminated and the property has been handed over to the landlord, but the tenant still refuses to pay, the landlord can turn to Rendin. Under normal circumstances, the landlord receives compensation for the damage within ten days of submitting the claim with supporting documents. "Without Rendin, the landlord would have to file a petition with the rent committee or take legal action. This is time-consuming and causes quite a lot of inconvenience. There is also the possibility that in this situation, even with the help of a bailiff, the tenant will still not get his money back," says Lia Siht. "The moral of the story could be that there is no point in being a landlord without Rendin."

Recommendations for landlords:

  • Choose home insurance for your property, including home contents and liability insurance. Without the extras, there's no point talking about the benefits of home insurance at all. A reliable provider is Rendin's collaboration partner ERGO.

  • When renting out your apartment or house, do it securely on the Rendin platform, where you can sign a rental agreement and handover act. Rendin's product comes with rent and a utility payment guarantee, property protection and expert support in case of problems.