Is pet damage insurance protecting the landlord or the tenant?

Who is being covered under a pet damage insurance policy?

Strengthening the rights of tenants to request pets in their rental properties has been one of the less contentious aspects of the Renters’ Rights Bill.

According to the government’s Animal Sentience Committee report on the Bill and its predecessor the Renters’ Reform Bill, 40% of tenants may request permission to keep a pet and one-third of these will be successful. With a population of some 4.6m private rented sector households in England this could mean an increase of 600,000 pets in lets.

The inclusion of pet damage insurance as a requirement to protect the landlord’s property is described by the government as providing landlords with “reassurance that any damage caused by a pet can be taken care of, and that the responsibility for preventing and resolving damage caused by a pet will fall to the tenant.” The legislation is also clear that the tenant should pay for the insurance as a condition of consent to have a pet in the property.

While being an important response to the concerns of landlords around the impact of pet damage, the Bill has highlighted a gap in the landlord insurance market for a responsive and relevant product to provide landlords with peace of mind. Addressing this gap raises questions of distribution, accessibility, and affordability to effectively mitigate the risk that more ‘pets in lets’ creates.

In developing Not for Lions, our dedicated pet damage insurance solution, we have considered and been asked the question about who should obtain the insurance.

Here is why we think it should be the landlord.

The Bill states that either the tenant has insurance that covers the risk of pet damage, or the tenant pay the landlord’s reasonable costs of having pet damage insurance. With the cost of insurance being recoverable from the tenant – effectively cost-neutral to the landlord, why wouldn’t they seek to buy a policy that protects them, rather than rely on a policy that ‘protects’ their tenant?

A tenant-led policy would mean that the landlord does not have any rights to access the policy. If the tenant left the property at the end of a tenancy and pet damage was discovered or they decided not to make a claim, there would be no way for the landlord to claim under that policy.

Whilst consent to an initial request for a pet is predicated on the purchase of insurance cover, what safeguards are in place to guarantee the tenant would renew the cover in subsequent years? This situation would, potentially, leave the landlord exposed to there being no cover in place at the end of the tenancy or at repossession of the property.

Striking the balance between landlord needs and tenant rights is going to be a combination of innovative solutions, accessible and affordable cover and understanding the dynamic of insurance purchasing behaviour.