Is there a dangerous gap in your property insurance?

If you’re a landlord you need to check your property insurance for public liability cover.

“This type of cover is usually included in the property insurance policy or policies you have to insure your car and household contents, but may not form part of a home owner’s policy that insures you against damage or loss to a property you are renting out,” says Berry Everitt, MD of the Chas Everitt International property group.

“And a recent case in the UK has shone the spotlight on what could happen if there is such a gap in your property insurance cover. It involves a fall by the guest of a tenant down some stairs in a rental property, and the claim, against the property landlord, is expected to be well above £1 million.

“The guest who fell is claiming that the stairs were not “fit for purpose” and because he is young, the compensation to be paid – if the landlord is found liable – will be a significant sum to cover ongoing care and loss of earnings. Fortunately for the landlord in this case, he does have public liability insurance, but would be facing a grim financial outlook without it.”

Writing in the latest Signposts Property newsletter, he notes that in South African property most lenders will insist that you have HOC (or house owner’s cover) on any residential property which is bonded, whether you live there or rent it out – and this is the policy to check for a public liability clause.

“If there is one, it will usually cover damage or loss of property by and injury to anyone who is legally on the property except members of your own household, which would of course include tenants and their guests in the case of a rental property.

“However, if there is no such clause – or your property is not bonded and for some reason you don’t have HOC – you need to see your broker or contact your insurance company about such cover immediately.

“Remember, although your tenant may well have a public liability provision in his own household contents policy, it will most likely not cover members of his household, and you could well be held liable if any of them falls down the stairs, or trips over some cracked paving, or has a water-damaged ceiling in the property fall on them after a geyser has burst.”

And, Everitt notes, the matter is even more urgent if the property you let is in a sectional title complex. “This will usually have one property insurance policy covering all the buildings in the complex, with the premiums being paid for by the body corporate out of everyone’s monthly levies. But if there is no public liability clause included, and a non-resident is injured on common property, you and your fellow owners will have to personally fork out any damages awarded.”

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