Tenant’s insurance in Poland – what is it and is it worth it?
Tenant’s insurance is a third party liability insurance policy that secures against damages caused by a tenant in the rented property. Such damage must be caused unintentionally and be a one-off event.
Tenant’s insurance is offered by a few insurance companies in Poland, so it is worth to compare offers before choosing one.
As a rule, the cost of such insurance is about 50PLN per year, which is relatively low in relation to the costs of potential damage it covers of around 50,000- 100,000 PLN. The tenant usually buys the policy themselves or can give a permission to buy one on his behalf. Purchasing a policy itself is very simple operation – it can be done directly with the insurance agent, by phone or by submitting online application. After the application is signed and approved, the only thing to do is to pay for it.
Reporting damages under the tenant’s liability insurance is also uncomplicated. A claim for compensation can be made online, enclosing photos of the fault and the tenant’s declaration of damage. It should be remembered that the tenant’s declaration must contain specific information such as: date and place, name and surname of the tenant, address of the rented property, signature and admission of guilt indicating the date and cause of damage. The decision on the payment of compensation is issued within 14 days.
Sim Property, as a property management company managing hundreds of apartments throughout Poland, recommends the purchase of such insurance to all its tenants. For some tenants, if experience shows us that the risk of damage is greater or there are limited possibilities of cost coverage, we make the tenant’s insurance obligatory. In our opinion the higher risk group includes foreigners, tenants who have pets in a rented property and tenants living in apartments rented by rooms. For this group of tenants having valid tenant’s insurance is a condition Sim Property imposes in order to be able to sign the rental contract. Potential tenants are informed about this from the very start. At this point we are very often are asked: “Why do I need insurances if I also have to pay deposit?”. The answer is simple – the insurance covers only some damages (unintentional and one-off) that may arise at any time during the rental contract. The deposit secures claims not only from damages (all kinds), but also financial claims, e.g. utility reconciliations. The deposit is settled down only after the contract ends.
Having the liability insurance the tenant increases his chances of getting the whole amount of the deposit back, in the case when the damage is greater than the deposit amount they don’t need to pay money to the landlord.
Importantly, the insurance continues even if the tenant moves to another apartment during the term of the policy.
Tenant’s liability insurance also benefits the owner of the rented property. It is and additional security (apart from the deposit) to obtain compensation for the damages caused by the tenant. What’s more, it secures higher amounts that the deposit. Let us remind you that on the Polish rental market a standard deposit is only one month’s rent (though Sim Property usually requires one months rent + charges). Obtaining a higher deposit is often problematic. Therefore proposing the purchase of insurance, which costs only 50PLN/ year is far easier to negotiate.
Summarising, the tenant’s liability insurance is an additional security for compensating a specific type of damage caused by the tenant. The policy is simple to buy, inexpensive and the claim process is also straightforward.
Sim Property manages rented properties and having in mind both interests of owners and tenants recommends purchasing such insurance. It works to benefit of all parties involved in the rental contracts. Hopefully, tenant’s insurance will become more common in Poland.