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We all consider our homes a safe place where we can live stress-free. Unfortunately, it isn’t as safe as we believe. A massive typhoon to home burglary can ruin your home and belongings and pop your safety bubble.

Several situations can damage your home, property and various fixtures. Such home risks are precisely why home insurance is essential. It is a policy that is a must for home protection from an unpredictable tomorrow.

However, did you know you do not need to own a house or apartment to purchase home insurance? Renters not purchasing home insurance is a common mistake that can result in a substantial financial loss.

The article will discuss why homeowners and renters need landlord and tenant insurance and the different coverage.

What Is Home Insurance?

Home insurance is a policy that protects your home from sudden damage or loss due to unpredictable reasons. The covered situations that can cause damage or loss include weather, home fires, floods and theft.

The insurance will repair or replace the damaged/lost property, fixture and structure. The reimbursement will be at market or replacement value, depending on the policy.

Home insurance will also provide a third-party cover if a guest is injured in your home. However, the coverage can differ depending on if it is a landlord insurance or tenant insurance policy.

Landlord Insurance 

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Landlord insurance, also known as homeowner insurance, is necessary for every homeowner. The insurance protects the homeowner’s liability, structure, valuables and fixtures that belong to the homeowner. If you have rented your property to tenants, you should purchase landlord insurance.

The specific home insurance will cover damage due to weather, fires, floods and theft. A landlord insurance policy may also cover rental income loss due to property damage or tenant debt. 

Although, it is vital to understand insurance will not cover any damage to the tenant’s property (tenants are always liable for their property). Additionally, the insurance will not cover damage or breakdown to property and appliances due to wear and tear.

Why Homeowners Need Landlord Insurance? 

Landlord home insurance is not mandatory but is crucial no matter where you live. As a homeowner, you are liable for the home structure (internal), fixtures, plumbing and electrical system. Repairing or replacing can be expensive and may take a while to recover from.

For example, a super typhoon hits Hong Kong, and the rain and strong wind cause window damage and internal flooding. The weather could ruin the flooring, walls and even the electrical system. The homeowner will be liable to repair all damaged fixtures immediately. 

In addition, your property or lack of repairs may cause renter or third-party injury, which can turn into lawsuits. The landlord must protect their legal liability and provide medical and compensation costs to the injured party. The landlord will only be liable if the injury was directly due to the landlord’s negligence.

Landlord insurance will reimburse the costs related to the repairs, replacement, rent income loss and third-party liability.

Tenant Insurance 

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Tenant insurance, or renter insurance, is a home insurance policy specifically for home renters. Many renters do not have their own home insurance and wrongfully believe their landlord’s insurance will protect them.

Tenant insurance covers damage and loss of the renter’s personal property in the rented home. The insurance also provides a third-party liability cover if a guest is injured or their property is damaged due to renter negligence.

Tenant insurance will reimburse the cost of repair or replacement regarding personal property and legal and medical expenses regarding third-party liability. The insurance will only cover if the damage was due to the covered reasons, such as weather, fire, floods or theft.

Some policies may also cover the security deposit if the landlord declares bankruptcy and fails to return the deposit.

Why Renters Need Tenant Insurance? 

Even if, as a renter, you may believe you don’t have many expensive valuables- think again. Imagine re-buying all your clothes, electronics and furniture – it will all add up to a large amount. Thankfully, the insurance will cover all personal property in the house or apartment, from clothes and electronics to jewellery (with limits).

For example, an appliance fuses while the tenant is at work, and a fire gets out of control, burning all valuables. In this case, if you do not have tenant insurance, none of your belongings will be reimbursed or compensated. The landlord insurance will only cover all the walls, provided furniture and fixtures.

However, you may not need to be financially stressed with tenant insurance, as the insurance will reimburse all the belongings at market or replacement value. It is important to communicate with insurers about high-value assets and have a property inventory to ensure the limit is enough.

Difference Between Landlord Insurance and Tenant Insurance

Landlord insurance protects homeowners and their property during an unforeseen disastrous situation.

Tenant insurance protects renters and their personal property in the rented home during unfortunate situations.

Landlord insurance and tenant insurance can help reduce financial loss drastically when facing home risks.

Both insurances are essential to the respected policyholder, and all homeowners, landlords and renters need their own specific home insurance. 

 

To Learn More about landlord insurance and tenant insurance and protect your home and belongings in Hong Kong and Asia, contact Red Asia Insurance.