There are many different types of property insurance – and each property type requires the protection of specialist insurance appropriate to the nature and use of that property.
So, home insurance for the owner-occupying home owner differs from commercial property insurance, and both differ from landlords’ insurance for the owners of residential buy to let property. Unless you have arranged the appropriate type of insurance for the property you own, you may find that any subsequent claim for loss or damage may be dismissed by your insurer.
Just as the name suggests, HMO insurance is a specialist form of insurance for landlords of HMO properties – or Houses in Multiple Occupation.
The government website explains that a House in Multiple Occupation (HMO) is one let to a number of different tenants who are not of the same family or household. If three or more tenants live on the premises, form more than one household, and share essential facilities such as a bathroom and toilet or kitchen, the let accommodation is known as an HMO.
The website further explains that much of this type of let accommodation is sufficiently special to require licensing by the local authority. If the HMO houses more than five tenants, living as more than one household and sharing facilities, a licence granted by the local authority is obligatory – but local councils also have the authority to extend licensing requirements to any type of HMO.
The need for licensing reflects the special nature of an HMO as shared living accommodation and even extends to the need for the landlord of such a property to be a “fit and proper person” – someone who has not previously breached housing legislation or regulations.
Specialist HMO insurance is also needed for the special type of let accommodation represented by this form of shared living.
What does HMO insurance cover?
The precise details of HMO insurance may vary from one insurer to another, of course, but there are a number of common threads:
- buildings insurance lies at the heart of HMO insurance – as, indeed, it does for any type of landlord insurance or property insurance in general – since it protects the very structure and fabric of the building against potentially devastating risks such as fire, explosions, flooding, storm damage, impacts, vandalism and theft;
- some insurers may even include cover against the risk of malicious damage committed by tenants or their visitors;
- HMO insurance may also protect the contents owned by the landlord of an HMO – insurance of tenants’ belongings is typically a matter entirely for the tenants to arrange;
Landlord liability insurance
- as the landlord of an HMO, you are responsible for taking every reasonable precaution against any tenant, their visitors, or even members of the public from suffering an injury or sustaining damage to their property;
- if that happens, you may be sued for such liability;
- since claims may assume significant proportions, it is usual for HMO insurance to incorporate a minimum of £1 million public liability indemnity insurance – but some insurers increase the level of cover to as much as £5 million;
Loss or rental income
- in the event of a serious insured incident which results in loss or damage making your HMO temporarily uninhabitable, you stand to lose a considerable sum in rental income;
- HMO insurance typically provides the option for a degree of compensation for such loss of rental income.
If you are the landlord of an HMO, therefore, specialist HMO insurance is likely to prove a more than prudent precaution.