27 Oct 2016
Are rented flats covered by the Buildings Insurance?
Flats that are rented out by the leaseholder are covered by the Buildings Policy for damage arising from insured events
in the same way as owner occupied flats although the tenant cannot make a claim, it will have to be made by the lessee,
Letting Agent or Property Manager.
It is expected by insurers that in almost every block there will be let flats and the norm allowable in most leases is on an
assured short-hold tenancy of 6 months or more to professionals via a letting agent. These lets are considered the next
lowest risk to owner occupied however there are statistically proven higher risk categories of letting and tenants and
they include short-term lets of less than 6 months plus holiday lets including Air BnB, and local authority, DSS, Housing
Association lets and letting to Students. There is a legal requirement under the new Insurance Act for a reasonable
search to be made to ascertain whether flats are let and on what basis and for the details to be advised to insurers.
Insurers will look at the claims experience of the block when deciding terms where there are higher risk types of letting
and 1 flat in a claim free block of 10 let to a housing association with the same tenant there for 6 months plus should be
OK however most Blocks of Flats Insurers will not cover short term lets especially Air Bnb even with a higher premium or
increased excesses. This then triggers a lease breach as most leases say the lessee isn’t allowed to undertake activities
which adversely affect the cover terms offered, in which case the lessee should stop the short term letting and let us
know when it’s ended to maintain full cover.
In the event that the flat becomes uninhabitable (i.e. without heating, water, cooking or sleeping facilities) as a result of
an insured event and there becomes a need for the residents to move out then the policy will usually pay for the
alternative accommodation of a tenant as well as the lessees providing the tenant continues to pay their rent to the
Landlord. Should the damage be severe and prevent re-occupation for at least a month or so then it is likely that the
tenant will find a new let elsewhere at which time Insurers will cease to pay for the tenants alternative accommodation
but instead reimburse the Landlord for their loss of rent until the flat is habitable again.
Tenants are also Third Parties like the Milkman or Postman so that if they are injured by the building (i.e. the ceiling
falling in or tripping and falling down the stairs) then they could submit a claim under the Property Owners Liability
Section of the policy.
What other cover does the Landlord need?
If the flat is rented out furnished then the Landlord should have a contents policy not only to cover their contents but
it also should provide Liability cover should a tenant be injured by an item of contents and sue the Landlord. Please
remember carpets in flats are deemed to be contents (unless glued down) and not covered by the Buildings Policy so
unless a flat is let out completely bare Contents cover should be taken out by the Landlord.
St Giles does not arrange Contents Insurance as there are specialist Insurers and Brokers in that field that offer tailored
policies for Landlords which could include Loss of Rent and other extra’s they may need.
What cover does the Tenant need?
Then tenant should also take out a Contents policy to cover their belongings and this should also include a Liability
Section in case an item of their contents causes injury to or damage to the property of any of the lessees or visitors.
Again, this is not a product offered by St Giles but finding cover should be as easy as looking online.