“When damage occurs in a rented apartment, it is important first to determine the cause. One situation is if, for example, a common-use pipe breaks due to wear or technical failure, quite another if the tenant carelessly floods the apartment or neighbors. The financial responsibility depends on the circumstances of the incident,” explains Gediminas Pakeltis, Head of Insurance Product Distribution at Swedbank.
According to data from Swedbank insurance company, such water damage is not uncommon. Last year, it accounted for about 35% of all home insurance cases registered by Swedbank. The average payout for such damage was 1.5 thousand EUR, and in the largest cases, losses exceeded 85 thousand EUR. The causes vary – from broken pipes or leaky joints to malfunctioning household appliances and residents’ carelessness.
It is advisable to discuss responsibility in advance
According to G. Pakeltis, rental relationships are contractual, so the owner and tenant can agree in advance on the rights and obligations of both parties. It is advisable to clearly specify in the rental agreement what the owner is responsible for and what the tenant is responsible for.
Such an agreement becomes especially important when damage occurs. Although responsibility primarily depends on the cause of the incident, clearly defined obligations of both parties in the rental agreement can help avoid additional uncertainties or disputes.
“Much attention is usually paid in the rental agreement to the price, deposit, or utility fees, but it is also advisable to discuss responsibility issues before handing over the apartment keys. Then, when damage occurs, both parties know their duties more clearly,” says G. Pakeltis.
Both parties can take care of insurance
Home insurance in Lithuania is not mandatory, so it is not established that the rented apartment must be insured specifically by its owner or tenant – the insurance contract can be concluded by either party. Regardless of who concluded it, the payout for damage to the apartment itself is paid to its owner unless they specify it to be transferred to another person.
The situation is different with items in the apartment. If home property insurance is chosen in the insurance contract, protection applies to the owner’s and tenant’s items in the insured apartment. If a computer, television, or other property belonging to the tenant is damaged by an insured event, the payout may be paid to them.
“In such a case, it may be necessary to prove that the damaged item belonged specifically to the tenant. Acquisition documents or the rental agreement showing which items were handed over with the apartment can be used for this,” notes G. Pakeltis.
It is important what protection applies
When renting an apartment, it is important to know not only whether it is insured but also what exactly the insurance covers. For example, if damage is caused to neighbors or their property, liability insurance may be relevant.
In such a case, it is important whose liability is insured. If the insurance contract is concluded by the tenant themselves and includes liability coverage, it may apply to damage caused by their fault. However, home insurance concluded by the owner does not automatically mean that the same protection applies to the tenant. Therefore, just knowing that the apartment is insured is not enough – the scope of the specific contract is also important.
The owner may also incur losses if the rental agreement must be terminated due to an insured event (for example, due to fire or water supply accident). In such a case, depending on the chosen insurance, lost rental income may be compensated while the apartment is being repaired or restored.
“At the start of the rental, it is worth spending time not only on financial terms but also on responsibility and insurance issues. When the owner and tenant clearly know who is responsible for what and what protection applies, it is much easier to resolve the situation if an accident occurs in the apartment,” says G. Pakeltis.
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