To secure rental income, it is essential to consider different types of insurance, of which landlord insurance is the most important. Landlord's insurance is designed to protect the apartment or property owned by a residential investor against risks that are not covered by standard home insurance or building society property insurance.
Tenant's home insurance focuses on the tenant's own contents and some damage caused by the tenant, but the landlord needs more comprehensive cover. For example, sudden water damage, fires and interruption of rental income can cause major financial losses if not covered by your own insurance.
In this article, we provide independent information on landlord insurance from different insurance companies so that you can make informed decisions when comparing the different options. We cover basic coverage, additional coverage, deductibles, tax deductions, and how to proceed with a claim with practical examples. This article is designed as a neutral "lens" through which you can find the best landlord insurance options, so you only pay for what you need and get the coverage you need to make your investment property more profitable.
What is landlord's insurance, and how does it differ from home insurance?
Home insurance is primarily for the tenant: it protects the tenant's belongings and provides liability insurance if, for example, the tenant causes damage to a neighbour through negligence. It does not, however, guarantee that the dwelling's structures, fixtures and fittings and, above all, the rental income will be protected in the event of, for example, water damage or fire.
Landlord insurance is a product tailored specifically for the owner of a property or apartment. At its core, it is designed to ensure the income and value of the homeowner's property by covering the following, which we will explore further in a later section:
Structures and fixed furniture:
- Compensates for damage to the interior of the dwelling and to fixed furniture, such as flooring materials or kitchen cupboards, which is not covered by the building society's insurance.
- For example, in the event of water damage, the building company's insurance covers the load-bearing structures, but the landlord's insurance covers the cost of repairing the interior of the apartment.
Suspension of rental income:
- The insurance protects rental income if the dwelling becomes temporarily uninhabitable due to damage.
- This is particularly important for an investor for whom rental income is a significant source of income.
Legal protection:
- Covers legal costs in tenancy-related disputes, such as eviction proceedings or compensation claims.
Additional safeguards:
- Comprehensive liability insurance covers the landlord's liabilities if the damage to the apartment causes damage to others.
- The extensions cover compensation for intentional damage, such as vandalism caused by a tenant.
How does the landlord's insurance complement the property insurance and the tenant's insurance?
The building society's property insurance covers the large, common structures of the building, while the tenant's insurance focuses on the tenant's own belongings. Landlord's insurance bridges the gap between the two, providing comprehensive cover for exactly what matters most to the homeowner: the interior of the apartment, the fixtures and fittings and the continuity of rental income in the event of damage.
The building society's property insurance is important because it covers a large proportion of potential damage, such as water damage or structural problems. However, it is limited to the common parts of the building, such as load-bearing walls, plumbing, the façade and the common areas of the building. If a water leak or fire damages the internal surfaces of the apartment or fixed fittings, the building society's property insurance may not cover this damage. In this case, the liability will remain mainly with the landlord if you rely only on this insurance.
Tenant's insurance (usually home insurance with liability cover) covers the tenant's personal belongings and some damage for which the tenant is liable to others. These include the tenant's own furniture, electronics or other personal possessions. However, it does not cover the homeowner's property, such as the floors of the apartment or bathroom cabinets, nor does it provide protection against loss of rental income in the event of a renovation that takes several weeks or months. In addition, the tenant's insurance may expire in the middle of the tenancy if, for example, the tenant does not renew it - the landlord has no full control over the validity of the tenant's insurance.
The landlord's insurance, on the other hand, covers the points from the homeowner's point of view that are not covered by the above-mentioned insurance policies. It covers damage to structures, repairs to fixed furniture and, if necessary, provides rental income interruption cover if the dwelling is uninhabitable due to damage. In addition, it is often possible to add legal expenses cover to cover legal costs in the event of disputes relating to tenancies, as well as more extensive liability cover if structural defects in the dwelling cause damage to other parties or neighbours.
What does the landlord's insurance cover?
The main idea of landlord's insurance is to cover the risks that are not covered by the building society's property insurance and tenant's insurance. Here is a more detailed overview of the main and additional coverages.
Structures and fixed furniture
- What it covers
- Damage to interior surfaces, such as repairs to flooring materials, walls and ceilings.
- Fixed furniture, such as kitchen and bathroom cabinets and fixed appliances.
- Example:
- Water damage damages the wall structures in the bathroom. The building society's insurance covers the cost of repairing the common plumbing, but the landlord's insurance covers the repair of the walls and floor.
Suspension of rental income
- How does it work?
- Compensation for lost rental income if the dwelling becomes uninhabitable due to damage.
- The replacement period for this cover varies, but is usually between 6 and 12 months.
- Restrictions:
- Does not cover income lost due to the tenant's termination of the lease or other non-pecuniary damage.
- Example:
- There is a fire in the apartment and the renovation will take 4 months. The insurance will cover 800 €/month for the loss of rent, for a total of 3 200 €.
Additional safeguards
Some landlords remove extra cover from the insurance to keep the price low. However, it's a good idea to assess the risks you want to leave to your own pocket. For example, extended cover for deliberate damage or extensive legal cover may seem like an 'extra cost' - but if you are facing a costly court case with a tenant or malicious damage, extending your insurance can save you thousands of euros.
- Legal protection:
- Reimburses legal and court fees in cases such as weddings, tenancy disputes or claims for damages.
- The compensation limit could be, for example, €10 000-20 000.
- Comprehensive liability insurance:
- Covers damage caused to third parties by the landlord's apartment.
- For example, water damage from the landlord's plumbing will spread to a neighbour and cause damage to the downstairs apartment.
- Coverage of intentional damage:
- Malicious acts by the tenant, such as permanently defacing walls or breaking windows, can be covered if the policy has an extension.
- This often requires a criminal report to be filed and the insurance to be valid for at least a certain period.
Together with the building society's property insurance and the tenant's insurance. The landlord's insurance, with possible additional cover, provides a comprehensive safety net that gives peace of mind and predictability: even in the worst-case damage situations, the structures of the dwelling and the financial interests of the owner remain protected.
What is not covered by the landlord's insurance?
While landlord's insurance provides broad protection for the homeowner, it has other limitations in addition to the tenant's contents. These vary somewhat from insurer to insurer, but usually the policy conditions include at least the following clarifications:
- Normal wear and tear
- The insurance is intended to cover sudden and unforeseen damage, not normal wear and tear caused by living. For example, minor dents in floors, scratches on surfaces or light marks on kitchen worktops are part of the natural wear and tear of a rental property.
- If the wear and tear is long-term and is due to normal use, the landlord's insurance will not cover these costs. They are part of the homeowner's own maintenance costs.
- Neglect of maintenance
- If the landlord has not properly maintained the property or fixed a known problem, the insurance company may refuse to pay. For example, a prolonged water leak that could have been prevented by timely repairs will count as negligence.
- A good rule of thumb is that insurance covers damage that occurs suddenly and unexpectedly - not slow-moving problems that have been delayed because of the landlord's inaction.
- Certain types of intentional damage
- Some basic packages only cover a proportion of malicious or accidental damage, and for more comprehensive cover you often need to take out additional cover.
- In addition, insurers may require, for example, a criminal report or a certain period of insurance before a claim is made.
- Gross negligence
- If the tenant or landlord is exceptionally negligent, the insurance company may consider it not an "accident" but a negligent or intentional act. In this case, compensation may be refused or only partially paid.
- Long-term damp and mould problems
- Many people think that the landlord's insurance will also cover slow damp damage. Generally speaking, from an insurance point of view, it is a case of neglect or structural failure that is not a sudden loss. Such situations are not covered.
The landlord's insurance does not cover all possible damage, especially damage caused by long-term wear and tear or poor maintenance by the owner. These exclusions are important to remember so that you know exactly what situations the insurance will cover and what you need to cover yourself.
What is the cost of insurance, deductible and tax deductions?
The price of landlord's insurance is affected by several factors. Generally, insurance companies take into account the size of the property, location, year of construction and level of equipment, among other things. High value homes in city centres are typically more expensive to insure than small studio apartments in more remote areas. In addition, additional cover options such as intentional damage cover or comprehensive legal expenses cover will increase the premium.
- An indicative example: a small city flat (approx. 30 m²) can cost €100-200 per year, depending on the insurance conditions and the company. A larger family home with extensive additional coverage can go up to €300-500 per year.
The excess is the amount in euros that you have to pay yourself before the insurance company's compensation takes effect.
- A high deductible lowers the premium, but increases the financial risk for smaller claims.
- A low deductible increases the premium, but reduces the burden of payment in the event of a claim.
It is important to assess your own risk tolerance: if your home rarely suffers damage and your household can cope well with repairs of, say, €1 000, a high deductible may be a sensible choice. On the other hand, if you want to avoid large additional cost overruns, a lower deductible will give you peace of mind - albeit at a slightly higher annual premium.
The tax deductions apply to the landlord's insurance because the rental activity is taxable income. In practice, you declare insurance premiums as rental income expenses on your tax return, reducing the tax you pay on your rental income.
- Example: if your rental income for the year is €10 000, and your insurance premiums are €200 per year, you can deduct that €200 from your taxable rental income. This means that you will save on your insurance premiums by practically the same amount as your tax rate.
- Remember to keep a receipt or invoice for the premium for possible tax audits.
How to apply for insurance compensation?
Many landlords have never experienced a major loss, so the steps in the compensation process can be unclear. However, it is important to know how to proceed in a systematic way so that the insurance company processes the claim smoothly and pays any compensation promptly. Here is a general outline of the process:
- Minimise further damage
- The first task is to prevent the situation from getting worse. For example, in case of water damage, turn off the water supply, dry out excess water and prevent the damage from spreading. In case of fire, make sure that the emergency services are informed as soon as possible.
- In the case of intentional damage or burglary, do not touch the scene of the crime any more than you have to. If necessary, notify the police before cleaning up so that the damage can be documented.
- Document the damage
- Take pictures and make a short written report of what happened, what time of day it happened and what damage you observed. Information from the tenant or witnesses (dates, times, sequence of events) is also useful.
- Keep any receipts or invoices in case you need to fix something acute right away (e.g. the repairman came to plug a leaking pipe or install a temporary solution).
- Report the damage to the insurance company
- Contact your insurance company as soon as possible. Give them details of what happened: what kind of damage it is, how it was discovered and what you have already done to prevent further damage.
- Many companies have a web-based claim reporting system where you can upload photos and a written statement. Alternatively, you can call customer services.
- Making use of legal protection (where appropriate)
- In the event of a dispute (e.g. non-payment of rent, eviction, or a tenant refusing to pay for damage caused), make sure you have a legal expenses cover.
- The insurer will advise you on what legal documents or measures are required and will inform you of the limits of compensation. You may need to submit quotes or invoices for legal fees as an attachment.
- Assessment and remedies
- The insurance company may send an adjuster or ask you to get a professional opinion. Especially in the case of water damage and fires, the cost of extensive repairs must be carefully estimated.
- Temporary repairs are often allowed (or even recommended), but make sure you don't destroy any evidence of damage before the inspector's visit, unless it is absolutely necessary for safety reasons.
- Compensation decision and possible follow-up
- Once all the necessary documents have been submitted, the insurance company will issue a compensation decision. At this stage, you will see whether the expenses you have claimed will be reimbursed and what deductible you will have to pay.
- If you feel that the decision does not comply with the policy conditions or that there has been an error, you can ask the company for further clarification or make a written complaint. If necessary, you can refer the matter to the Financial and Insurance Advisory Service (FINE).
Knowing these steps in advance means that you can act quickly and in a structured way in the event of an accident. Don't wait or downplay the situation - reporting the damage as early as possible, documenting it properly and taking steps to prevent further damage is the best way to ensure that your landlord's insurance actually covers what you have promised.
Looking for more reliable tenants for your home? Read more on Immodan's page for landlords and rent your property to businesses.
.jpg)
