Dealing with insurance
There are two types of insurance to consider here – the landlord’s insurance and the tenant’s insurance.
Most landlords will have insurance cover. If you don’t you should have – your property is a valuable financial asset which you are handing over to strangers. You need some protection. To find out more about landlords insurance see my free online course here and the podcast here.
You will also want to be sure that your insurance is not being invalidated by your tenants, or if it is, that you have the right to claim against them for your losses. And here is where the drafting points come in.
Under the Unfair Terms rules (discussed on days 16 and 17), it will be considered unfair if you try to make tenants responsible for complying with terms and conditions they have never seen. So you need to provide them with a copy of, either of the whole of your insurance policy, or an extract of the relevant parts. So that they know what type of behaviour to avoid.
If you don’t do this, then your clauses aimed at making your tenants responsible (for example) for additional premiums payable because of their conduct, are likely to be found void.
The insurance that you take out will normally only cover the fabric of the building and your own fixture, fittings and contents. It will not cover your tenant’s possessions. They need to be made aware of this and told that they need to arrange their own cover. It’s a good idea to specifically say this in the tenancy agreement.
Tenants insurance is not normally that expensive. It will not only provide cover for their possessions but should also cover emergency accommodation costs if their rented home becomes uninhabitable for any reason (eg fire or flood).
Although I don’t think there is a problem with landlords recommending insurance to tenants, they are not allowed to *require* tenants to buy specific insurance products (from which they are no doubt getting a commission). Any contract term which requires tenants to buy specific insurance products from you will be void for unfairness. So don’t do it!
NB Find out more about my Tenancy Agreement Service on Landlord Law.