Landlords earn rental income by renting out their units, but what if they unfortunately encounter a tenant who abuses their rights? Kwiksure breaks down the core function of landlord insurance, analyzes how landlord rental insurance shares rental risks, and discusses precautions for purchasing landlord insurance, allowing landlords to reduce losses caused by tenants defaulting on rent or maliciously damaging their properties.
Landlord insurance, also known as rental insurance or rental property insurance, is a home insurance plan specifically designed for owners of rental properties. It primarily protects landlords against risks arising from renting out their properties, such as tenant defaults, malicious damage to the unit, and the owner's legal liabilities.
Landlord insurance is designed specifically for owners of properties that are not owner-occupied but rented out. Its main coverage includes rental loss and protection against tenant misconduct. If a tenant maliciously damages the property or defaults on rent, compensation can be provided. It also protects the owner's appliances and belongings in the rental unit from accidental damage, as well as legal liability for bodily injury or property damage to third parties caused by structural problems in the unit (such as concrete peeling).
Even if tenants have purchased home insurance, landlords still need to purchase landlord insurance. Tenants' policies primarily protect their personal property and legal liabilities, but do not cover the building structure, owner-made renovations, the owner's third-party liability, or the risk of rent arrears or tenant misbehavior. For example, if the property unfortunately leaks water due to aging pipes, causing damage to neighbors, the legal responsibility often falls on the landlord, not the tenant.
Landlord insurance covers rental loss. If a tenant fails to pay rent as agreed, and the landlord obtains a rent order through legal action, the landlord insurance will compensate the landlord for the actual rental loss, depending on the policy terms and the maximum compensation amount, thus sharing the financial and legal burden of the landlord when unfortunately encountering a tenant who refuses to pay rent.
Landlord insurance also covers legal liability for injury or property damage to third parties (such as downstairs residents) caused by structural damage or water pipe leaks in the unit. Generally, liability for damages involving the unit's building structure rests with the landlord, while the tenant is responsible for damages caused by human negligence or improper use. In the event of accidents involving the unit's structural components, such as original aluminum windows flying off and falling into the street, or water pipes bursting and damaging the floor below, landlord insurance can protect the landlord's legal liability.
If the furniture or property provided by the landlord is maliciously damaged by the tenant, the landlord's rental insurance can also provide compensation. The landlord's insurance covers damage to fixed fixtures, flooring, and walls within the unit, as well as damage to furniture and appliances provided by the landlord and listed in the policy. However, normal wear and tear, such as natural aging, is not covered under the category of malicious damage.
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Zurich Breezy Home Insurance Plan (Landlord Insurance) |
|
|
Benefits |
Price (HKD) |
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Owner's legal liabilities and liabilities for common areas |
10,000,000 |
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Total Coverage of Home Contents Protection |
250,000 |
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Indoor Home Content |
100,000 (per set) |
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Outdoor Property |
50,000 (each accident) 2,500 (per piece) |
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Temporary relocation |
50,000 |
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24-hour Emergency assistance services |
Includes (Cashless, Limited to standard hours and standard area) |
|
Landlord's rental loss |
20,000 (per month, Max 6 months) |
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Standard Excess (household property scope) |
Burglary: $5,000 or 10% loss Water loss: 0 |
*All information is subject to the information released by the relevant insurance company.
If a tenant fails to pay rent in accordance with the terms and conditions stipulated in the "Lease Agreement," or loses rent due to insured accidents (such as fire or flooding) that render the property uninhabitable, the landlord's insurance can provide compensation for the rental loss according to the maximum amount specified in the policy terms. For the Zurich Breezy Home Insurance Plan, landlords can receive up to 6 months' rental loss compensation, at a rate of HK$20,000 per month.
The Zurich Breezy Home Insurance Plan covers the cost of repairing or replacing furniture, self-installed decorations, wall-mounted appliances, and other items provided by the owner in their unit that are damaged accidentally.
In addition to providing up to HK$10 million in third-party liability protection, covering claims for bodily injury or property damage to neighbors or third parties caused by unit leaks or structural accidents, Zurich landload insurance also offers optional building coverage, including accidental damage to building facilities such as electric vehicle charging facilities, as well as debris removal and architect and surveyor fees incurred due to the need for reconstruction after an accident.
The Zurich landlord insurance plan supports emergency home assistance services, including electrical repairs, plumbing, and locksmith services. It also offers a cashless option during standard hours in standard areas and provides coverage in emergencies.
The premium for a landlord's rental insurance plan will be adjusted according to the age of the building, the type of property, and its size. The older the building and the larger the area, the higher the premium. Most insurance plans on the market only cover properties under 40 years old. If the property is older than 40 years, additional premiums are required, or the plan needs to be approved by the insurance company. For older properties, single old buildings, and village houses, the deductible will also increase accordingly, so special attention should be paid when choosing an insurance plan.
Most landlord insurance plans have a vacancy period limit, typically ranging from 30 to 60 days. If the property remains unoccupied for more than the consecutive vacancy period specified in the policy, it will fall outside the coverage scope.
While a stamped lease isn't mandatory when purchasing landlord/tenant insurance, most insurance companies will require landlords to provide valid proof of the lease if a claim is necessary. In the event of accidents such as leaking pipes due to aging pipes, resulting in injury or property damage to tenants, neighbors, or other third parties, the insurance company will rigorously examine the legal lease relationship between the landlord and tenant. If a valid formal lease cannot be provided, the claim may be delayed or even rejected.
If you unfortunately encounter a tenant who defaults on rent, you need to report it to the insurance company within 30 days of the tenant defaulting. After that, you can take legal action against the tenant and obtain a court order to recover the overdue rent. If you are still unable to recover the overdue rent within one month after the court order is issued, you can submit the relevant documents to the insurance company to claim compensation. After verifying the documents, the insurance company will compensate the landlord for the rental loss in accordance with the policy terms.
If the leak involves the building structure, concealed water pipes, and fixed fixtures, the landlord is generally liable for compensation. If the landlord has purchased landlord insurance, they can file a claim. However, if the leak is caused by the tenant's carelessness or improper use, such as a loose pipe installed by the tenant causing water to leak and flood the floor below, the tenant will be liable for compensation with their Home insurance.
It depends on whether the vacancy period of the property exceeds the vacancy period specified in the policy. Most landlord insurance policies in Hong Kong have a "continuous vacancy period" clause, which is usually between 30 and 60 consecutive days. Once this period is exceeded, the insurance company may refuse to compensate for accidents such as theft, malicious damage, or partial water damage.
Even if the landlord has purchased landlord insurance, the tenant still needs to purchase home insurance. Landlord insurance covers the building structure, renovations done by the landlord, the landlord's third-party liability, and the risk of the tenant defaulting on rent or being a tenant who refuses to pay rent; it does not cover the tenant's personal property or their own legal liabilities.
Landlord insurance does not include fire insurance; they are separate insurance plans. Generally, landlord insurance only covers the owner's property within the unit and legal liability arising from bodily injury or property damage to third parties caused by structural problems of the unit. Fire insurance, on the other hand, covers the cost of rebuilding or repairing the structure when it is damaged due to an accident. If you have a mortgage, banks usually require you to purchase fire insurance.
Kwiksure has over 20 years of experience in the home insurance industry, comparing quotes from over 60 insurers in Hong Kong. Use our online quotation tool now to get a free home insurance quote!
The above information is for reference only. Kwiksure takes no responsibility for the accuracy and timeliness of the information. For the coverage, mode of compensation, benefit limit and premium levels of any specific insurance plan, please refer to the relevant policy terms.
Cassidy is a content creator at Kwiksure. She mainly writes about cars and travel. She has previously worked in advertising creation and online media editing. She loves writing and is keen on discovering the latest topics. She is committed to bringing fresh, interesting and practical information to readers.
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