Insurances

Which insurances make sense for furnished rentals?

You don't really need to say much about the sense and purpose of residential building insurance (including natural hazards). If the building is completely or partially destroyed, you have to rely on the payment of the insurance in order not to suffer a financial catastrophe.

Unfortunately, residential building insurance does not cover all damage that can occur in connection with real estate. Both tenants and landlords should therefore think about which additional insurances come into question:

1. Household contents insurance

Household contents insurance insures all the furniture in a flat against various risks such as water damage, lightning strikes or even burglary. Especially if all the furniture is damaged or destroyed at once and has to be replaced at once, this can cause the owner great financial problems. 

If a flat is rented without furniture, it is clearly the tenant's responsibility to take out household insurance. The furniture and fixtures belong to the tenant and he wants to cover himself in case of damage. 

In the case of a furnished rental, all the furniture or at least the vast majority of it belongs to the landlord. The landlord should therefore have an interest in covering his furniture with household contents insurance. 

However, the landlord's household insurance does not cover the tenant's belongings. If the tenant wants to cover his or her own clothes, furniture or electrical appliances such as a laptop, the tenant must take out his or her own household contents insurance. Under certain circumstances, it may also make sense for the tenant to ask the insurance company of his or her trust whether an existing insurance policy can be extended to cover individual items or whether an individual item can be insured separately. 

2. Personal liability insurance

It is strongly recommended that every tenant takes out personal liability insurance. Such insurance is already available for a few euros a month and can save a tenant from high payments to the landlord in the event of an emergency. This insurance is worthwhile for every tenant, no matter how long a flat is rented. 

The private liability insurance pays, for example, if the tenant damages the bathtub or the expensive parquet floor in a flat due to carelessness. In our office we once had a case where a tenant accidentally flushed down a toilet block including its holder and thus damaged the sewage pipe. Locating and repairing the damage cost several thousand euros. The liability insurance paid the entire costs in the case. 

3. Other insurances

Landlords may also be interested in legal expenses insurance and insurance against loss of rent. At this point, of course, you have to ask yourself whether you want to insure yourself against every risk. Often, an optimal selection of tenants helps to avoid or minimise disputes or loss of rent right from the start.

When renting out furnished living space, a landlord must definitely give more thought to necessary insurances.

Author:

Lawyer for tenancy law Daniel Heinrich Pesch, LL.M.
https://www.anwaltskanzlei-pesch.de/