Does Landlord Insurance Cover Tenant Damage?

When it comes to malicious damage, insurers usually separate who caused it.

Malicious damage by people unlawfully on the property, such as intruders or vandals, is often included as standard in landlord buildings insurance.

Malicious damage by tenants and their guests, meaning people you have allowed to live in or visit the property, is usually only covered as an extension. This cover often comes with a higher excess, and most insurers will require you to report the damage to the police and provide a crime reference number.

Many landlords assume they are protected against deliberate damage, only to find their policy just covers malicious damage by people who had no right to be in the property. At Waltons, we can extend your cover to include malicious damage by tenants, subject to criteria.

The risk of tenant damage tends to be higher in properties with several unrelated occupants, shared living spaces or a high turnover of tenants. If you let a house in multiple occupation or rent to students, take a look at our HMO insurance and student landlord insurance.

For damage that goes beyond fair wear and tear, you may be able to recover the cost from the tenant’s deposit, your landlord insurance, or both. There is no single right answer, but these three questions can help you decide.

1. How does the cost of the damage compare with your policy excess? If the repair costs less than your excess, or only slightly more, a claim is unlikely to be worthwhile. Making a claim may also affect your premium at renewal, so smaller costs are usually better recovered from the deposit.
2. When in the tenancy did the damage happen? The deposit is normally only returned or divided up at the end of the tenancy. If serious damage happens part way through and needs repairing straight away, your insurance may be the quicker way to get it put right.
3. Is the damage likely to cost more than the deposit? Deposits are limited in size, so major damage, such as a damaged kitchen or bathroom, can easily cost more than the deposit covers. In this case, your insurance may be the better route, provided your policy includes the right cover.

Tenancy deposits must be protected in a government-approved tenancy deposit protection scheme. If you and your tenant cannot agree on deductions at the end of the tenancy, the scheme offers a free dispute resolution service to decide how the deposit should be split. You can find out more about tenancy deposit protection on GOV.UK.

Whichever route you choose, you cannot recover the same loss from both the deposit and your insurer. If part of the cost has already been met by the deposit, you should tell your insurer, as this will be taken into account in any claim.

You cannot rule out tenant damage completely, but a few simple steps can make it far less likely and much easier to deal with if it does happen.

• Reference your tenants thoroughly. Check previous landlord references, employment and affordability before agreeing a tenancy.
• Carry out regular, documented inspections. Give your tenant proper notice, take dated photos and keep written notes of each visit. Some landlord insurance policies require inspections at set intervals, so skipping them could affect a claim.
• Use a clear tenancy agreement. Set out your tenant’s responsibilities, including how to report repairs and any rules on decorating, smoking or pets.
• Choose hard-wearing fixtures and finishes. Durable flooring, wipeable paint and robust kitchen and bathroom fittings stand up better to everyday use and are cheaper to put right.