What is HMO insurance?
Just as the name says, HMO insurance is specifically designed cover for Houses in Multiple Occupation (HMOs).
It provides safeguards and financial defences against potential threats of loss or damage to the structure and fabric of the building, from risks such as flooding, fire, impacts (from vehicles and falling objects), escape of water, explosions, storm damage, vandalism and theft.
HMO insurance also extends to cover for whatever possessions you have in the dwelling – especially the contents of shared areas and facilities, for example.
Indeed, some HMO insurance policies even extend to the risks of malicious damage caused by your tenants or their visitors.
Does HMO insurance cover landlords’ liabilities?
Just as with many other forms of landlord insurance, HMO insurance typically provides indemnity against claims – and the legal expense of defending them – following an incident in which a tenant, one of their visitors, a neighbour or a member of the public is injured or has their property damaged and holds you liable.
In some instances – especially if personal injury is caused – claims like this might reach very substantial proportions. Although HMO insurance typically offers a minimum of £1 million indemnity, some providers extend this to up to £5 million for each claim.
Do I need a licence?
Concerned about the standards of accommodation offered in some HMOs, an increasing number of local authorities in England and Wales have introduced requirements for landlords to let their property only in accordance with strict licensing requirements.
There is currently a distinction between regular HMOs (at least three tenants in more than one household, sharing facilities) and large HMOs (a building of at least three storeys, accommodating more than 5 tenants, living as more than one household, and sharing facilities). Large HMOs must be licensed, but more and more local authorities have been requiring all HMOs to be licensed.
Indeed, with effect from the 1st of October 2018, new regulations have been introduced to require local authority licensing of all HMOs accommodating more than 5 individuals, in more than one household, sharing facilities. The move is expected to add a further 174,000 dwellings to the existing 60,000 HMOs that must be licensed.
any landlord who lets a property to 5 or more people – from 2 or more separate households – must be licensed by their local housing authority.
The move, affecting around 160,000 houses in multiple occupation (HMOs), will mean councils can take further action to crack down on the small minority of landlords renting out sub-standard and overcrowded homes.
The new legislation is in response to an admittedly small number of HMOs where there are concerns about the standard of accommodation offered or where there is overcrowding (the regulations lay down minimum floor area requirements in bedrooms, for example).
Does insurance offer compensation for loss of rental income?
In common with other forms of landlord insurance, your HMO insurance may provide compensation for loss of rental income if the building is damaged during an insured incident and is no longer habitable until repairs have been made.
The amount of compensation reflects your actual losses and is typically limited by a maximum amount over a prescribed period, often based on a percentage of your total building sum insured.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.