Is home insurance worth it when renting an apartment?
Is home insurance worth it when renting an apartment?
It depends on whether your landlord already has home insurance and, if so, what it covers. If the landlord has a policy, some protection is already in place, but your personal belongings and liability may not be included. If the landlord has no insurance, you can take out a policy yourself. Both approaches offer protection when things go wrong, but they work in different ways.
Imagine moving into a new rental apartment with your laptop, bicycle and a wardrobe full of clothes. Everything is fine until one evening you accidentally leave the bath tap running and water leaks into your neighbor’s apartment below. Or someone accidentally drops your laptop on the floor. Who pays for the damage?
Many tenants assume that the landlord’s insurance covers everything. In reality, that is not quite how it works.
What does home insurance cover?
Home insurance is not a single, narrowly defined type of protection. It is a policy that can combine several types of cover, typically buildings insurance, home contents insurance and personal liability insurance. Depending on whether you are the owner or a tenant, some of these will matter more to you than others.
Buildings insurance covers the structure of the property itself: walls, floors, ceilings, built-in kitchen furniture and bathroom fixtures.
Home contents insurance covers movable belongings, such as furniture, appliances, clothes and a bicycle.
Personal liability insurance works differently. It covers damage you accidentally cause to someone else, whether that is the landlord or a neighbor.
Which types of cover matter to landlords?
With home insurance, landlords can insure the building itself and, if the apartment is furnished, the furniture and appliances that come with it. They can also take out personal liability cover in case something happens in the apartment because of their own actions or negligence.
This may not be enough, which is why landlords can add two further protections to their policy: cover for damage caused by tenants and cover for loss of rental income.
Tenant damage cover applies when a tenant causes damage intentionally or through gross negligence. For example, they might deliberately damage the kitchen furniture or leave a tap running for so long that the resulting water damage also affects the neighbor downstairs.
Loss of rental income cover compensates the landlord for agreed periods of lost rent, for example while repairs are carried out after an insured incident has made the apartment temporarily uninhabitable or unsuitable for renting.
A landlord’s main priority is to protect the property and the money invested in it. These additional options can be particularly useful if a tenant does not look after the property responsibly, or if an accident causes damage.
Which types of cover matter to tenants?
For a tenant, the two most important protections are home contents insurance for your belongings and personal liability insurance, which keeps your finances safe if you accidentally cause damage to someone else.
Let’s look at both more closely.
Home contents insurance
A common misconception is that the landlord’s insurance also covers the tenant’s belongings. This is not necessarily the case.
The landlord’s policy generally covers the items they have left in the apartment, but not your personal possessions. If your laptop is damaged or your bicycle is stolen from your rental home, you will have to cover the cost yourself unless you have appropriate insurance.
Personal liability insurance for damage to third parties
Personal liability insurance helps when you accidentally damage property that does not belong to you or cause harm to a neighbor.
For example, imagine leaving an iron plugged in and causing a fire that damages neighboring apartments and the building’s façade. In situations like this, repair costs can easily reach tens of thousands of euros. That is exactly when you will be glad to have personal liability insurance.
Can tenants take out home insurance themselves?
Yes. Tenants can take out their own home insurance policy if the landlord has not arranged one.
Some insurers also offer tenants more limited products than a full home insurance package, such as home contents insurance and personal liability cover without the need to insure the entire property. If you only want protection against specific risks, it is worth asking insurers about these options.
Should both the landlord and the tenant have insurance?
Not necessarily, but it is worth talking to your landlord before you take out a policy.
Find out whether they already have home insurance, exactly what it covers and whether the policy considers that the apartment is rented out. Some policies are taken out on the assumption that the owner lives in the property and renting it out could affect the cover.
If the landlord already has insurance for the same risks you are considering, there is no point in both of you paying for duplicate cover. An insured loss is compensated only once, even if both parties have valid policies.
However, if the landlord has insured only some of the things you would like to protect, it makes sense to take out a separate policy based on your own needs.
When should tenants consider home insurance?
If you own valuable electronics, a bicycle, a musical instrument or another expensive item that would be costly to replace, home contents insurance is a sensible choice.
The same applies if you live alone and move often, for example because of your studies, as moving your belongings from place to place can involve additional risks.
You should also consider insurance if you are unsure what the landlord’s policy covers. Ask them directly what is included. If the answer is unclear, or the landlord has no insurance at all, taking out your own policy is often the simpler and safer option.
Before signing a rental agreement, it is also worth reading the guide to rental agreements prepared by the Estonian Ministry of Justice. It covers other important points to consider when entering into a tenancy.
How does Balcia home insurance protect tenants?
Balcia home insurance works in the same way whether you live in your own home or a rented one. You can choose the protection that suits your needs, including home contents insurance for your belongings and personal liability cover in case you accidentally damage the landlord’s property or a neighbor’s home.
If something happens and you temporarily need to move elsewhere because of an insured incident, the insurance also covers the cost of temporary accommodation.
The policy can be taken out and cancelled without additional fees, so when your tenancy ends, you are not tied to a lengthy commitment.
If you would like to know more, read our articles on what home insurance covers and how home insurance deductibles work. If you are a landlord looking to protect your property, our article on how to protect your property as a landlord may also be helpful.
Renting does not mean you have to protect everything on your own. A clear understanding of who insures what helps prevent unexpected expenses and unnecessary disputes between landlords and tenants.