A common question we’re asked by Landlords is “What is the difference between Home Insurance and HMO Insurance? ”.
While the basis of any property insurance is similar in that it is protecting your home or investment, some of the intricacies and the specialist nature of a House of Multiple Occupation risk means that some aspects of cover are very different.
A standard home policy will generally exclude letting of the property, as such, occupation as an HMO would be expressly excluded in the policy conditions.
Specialist HMO policies are specifically designed for Landlords and understand the different risks proposed by multiple tenants.
Should a claim occur under a home insurance policy and, it comes to light that the property was let to multiple tenants, the insurers would be within their rights to refuse to pay a claim.
Property Owners Liability Insurance
A standard home policy will typically protect the owner against their legal liabilities should a member of the public become injured or suffer damage to property.
For example, a tile may fall from the roof and hit a passer-by, or a postman may cut his hand on a letterbox.
The legal liability requirements and duty of care for an HMO Landlord also extend to cover tenants, as such, an HMO Insurance policy will also include injury to tenants or damage to their property.
For example, a tenant falls down the stairs as a result of a loose bannister or electrocutes themselves on a faulty plug socket.
Loss of Rent Cover
Unlike a standard home policy, HMO Landlord Insurance can also extend to cover loss of rental income following a claim. For example, your property suffers a fire.
It cannot be occupied for 4 months while the property is refurbished, the policy will provide compensation for the rental income, which would typically have been received during this period.
As a House in Multiple Occupation typically provides shared facilities and may have been adapted to provide additional kitchen or bathrooms.
The rebuilding sum insured of an HMO needs to adequately reflect the extended fixtures and fittings, as such, levels of cover must be reviewed regularly. Mainly if improvements have made to the property.
Malicious Damage by Tenants
As a standard household policy does not cater to tenants there is no provision for any cover for damage caused maliciously by the tenants themselves, for example, punched/kicked doors or walls.
Even if you have a Landlord Insurance policy, you should check carefully as to whether malicious damage cover is provided, as it can often be excluded, or require payment of an additional premium.
Forcible and Violent Entry – Theft Claims
As House In Multiple Occupation Insurance is effectively a commercial insurance contract, policies will typically include a condition that any theft claim is subject to a “forcible and violent entry condition”.
In simple terms, the property needs to have been broken into for a theft claim to be valid and will not cover losses where doors or windows have been left open.
However, some Home policies will provide what is known as “Full Theft Cover”; whereby theft claims will be covered without the necessity to highlight a forcible or violent entry.
Specialist HMO Cover
The simple conclusion is, if you own an HMO property, you should make sure that you have the appropriate local authority licence together with a specialist HMO Insurance policy which caters and understands the particular risks involved with multiple let properties.
Speaking to a property insurance expert can provide genuine peace of mind that your asset is correctly protected.
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