House Party Claim
A buy-to-let property represents a large investment to be entrusted to people you rent to who you don’t know and are loathe to trust. Wise property owners take out insurance to protect them against damage caused to the property whilst it is let out.
In November 2009 a party at a house in Bickley, Kent, ended in disaster after an invitation was posted on Facebook. More than a hundred gatecrashers turned up and wrecked the home, smashed windows and ruined carpets. This was an owner-occupied property, but many landlords, particularly those renting to students, might fear that something similar could happen to their property. How far will property owners insurance go to help in this kind of situation?
It might be boring, but the precise things that you are covered for are set out in a document that the insurance company will give you when you take the policy out. Your broker is obliged to give you a “policy document” at the time that you take out the policy. He’ll also give you a “keyfacts” document, which is a simplified, summary version of the policy document, but it’s the policy document that forms the legal contract between you and your insurance company, together with a policy schedule, which will set out the amounts of cover that you have.
Insurance companies will refer to “an insured peril” and a “policy section” and it kind of gets confusing to the layman at that point.
Let’s suppose you have a claim arising from an incident similar to the one at Bickley. Windows were smashed and carpets were ruined. It’s malicious damage. However it’s two completely different things to an insurer. Windows are part of the buildings. Carpets are contents. A typical property owners policy automatically has cover for damage to the buildings, but landlord’s contents are normally an option purchased at an additional cost. That makes sense. Most properties are let unfurnished, so the carpets will belong to the tenant and the tenant should be claiming on their own contents insurance for that. You as landlord have no responsibility to the tenant for those carpets.
Now think about the windows. The policy that I checked provides insurance for loss or damage “by any persons of malicious intent other than …… by any person lawfully on the premises (other than the tenant).” These “other thans” are important. If the damage was caused by people invited to the party, the damage will not be covered. If the damage is caused by gatecrashers, it is covered. If it was caused by the tenant himself, you will be covered, but there’s normally some other stipulation about the maximum you are allowed insurance for, normally about £5000.
What is to be learned from all of this? First, if you do own the carpets in your property and you want them protected, you need to take out the landlord’s contents option on your insurance, even if you think of your property as unfurnished. Secondly you are relying on your tenant keeping an orderly house. If he invites vagabonds who cause destruction, you will need to look to the tenant to make repairs at his own expense. If he is invaded by unwelcome hooligans, that’s unfortunate, and the damage will be covered by your insurance.
