How Does Tenant Type Affect Landlord Insurance

When you are buying landlord insurance policies for residential properties, landlords must state the “tenant types” of the occupants that they are letting the property out to. Tenant type is merely one of the many factors which insurers consider before deciding upon a price of premium.

Most common tenant types include:

  • professional tenants / working tenants
  • student tenants
  • DSS tenants / LHA Housing Benefit tenants
  • asylum seekers
  • council tenants
  • retired tenants
  • company employee tenants
  • friends and family member tenants

Each tenant type imports its own unique circumstances to the situation, and is risk assessed by the insurance company.

Landlord Insurance for Professional Tenants

Professional tenants (or working tenants) refers to anyone who is in employment and able to pay their own rent. Professional tenants are typically seen as the easiest tenant type to manage, and therefore the most attractive option when looking for tenants. Just make sure that your professional tenants inform you if they become unemployed, as this will invalidate your existing insurance policy!

Landlord Insurance for Asylum Seekers

Not all insurance companies will provide cover for asylum seekers, as asylum seekers’ situations can be quite complicated. By definition, quoted directly from UNHCR, “an asylum seeker is someone who has applied for asylum and is waiting for a decision as to whether or not they are a refugee”. Essentially, in the UK this means that they have requested refugee status and are still awaiting an outcome. Gaining refugee status will mean that they are protected in the UK, and no longer will have to fear persecution for things like race or religion in their own country. This makes asylum seekers quite high-risk when it comes to landlord insurance, as the tenants may never receive refugee status and will eventually have to be deported.

Landlord Insurance for Tenants on Benefits

DSS tenants (a term still commonly used by landlords and letting agents despite Department of Social Security no longer in existence) are those in receipt of Local Housing Allowance (LHA), otherwise known as Housing Benefit. Some insurance providers will not cover DSS tenants due to restrictions in their policy. Due to DSS tenants facing financial difficulty, enough for them to have to resort to claiming government support, insurance providers see this as being a riskier choice than working tenants who earn a steady flow of income. DSS tenants may not always be able to pay rent on time due to changes in their benefits or unexpected bills or other expenses. However, some insurers do offer DSS landlord insurance.

Landlord Insurance for Tenants in Higher Education

Student landlord insurance will also typically come at a higher premium. This is because student tenants are often deemed as being “high risk” to insurance providers due to their perceived lack of (or inexperience with) responsibility typically associated with youths. Student tenants are often not as financially stable as their full-time professional counterparts either, and so rent payments, like with DSS tenants, may become an issue at one point or another.

Landlord Insurance for Family Members and Friends

It’s not uncommon for landlords to rent to their friends and family members, usually with less formality than normal in the situation. But you will definitely need to have a written and signed tenancy agreement in place for the landlord insurance. Any friends or family members that you rent to will also not be allowed to claim housing benefits, so if you want to make sure that you always receive their rent payments on time, make sure that your friends or family member tenants are financially stable – or you may end up having to pay their rent or kick them out!

Of course, the above generalisations are not always the case and those professional tenants who looked perfect on paper may turn out to be a complete nightmare. Likewise, asylum seekers, students and housing benefit claimants may be the best tenants you have ever had the pleasure of renting to. Unfortunately, some generalisations have to be made by the insurance companies. All you can do is ensure that you are covered if the worst comes to the worst…

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