According to Karolina Emanuelė Karpova, director of BTA Insurance’s Claims Department, as the rental market in Lithuania grows, not only are there more investment properties, but also more conflicts over responsibility. In such a case, one unpleasant situation can seriously thin the wallets of both the tenant and the owner.
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“In the rented housing market, one of the most common causes of conflict is a different understanding of what constitutes natural wear and tear and what is considered damage. For example, slightly worn furniture or minor wall scratches after several years of use are normal, but broken furniture, damaged household appliances, or flooded parquet can already mean financial losses. In such situations, there is often more emotion than clarity, so it is very important to agree on responsibilities in advance and ensure adequate protection,” says K.E.Karpova.
Most problems – due to unagreed rules
According to Martynas Tarvydas, head of the real estate management company “Monto”, conflicts are usually “programmed” even before the tenant moves in.
“Conflicts can arise due to different expectations and rules that are not fully clearly discussed before the tenant moves in. Also, problems are often caused by insufficiently documented condition of the housing at the beginning of the rental. If there are no clear photos, handover-acceptance act, or agreed rules, it can become difficult to determine responsibility in case of damage,” says M.Tarvydas.
The director of BTA Insurance’s Claims Department notes that after an incident, both sides often have a different version of the story.
“The tenant considers the damage as natural wear and tear, while the owner expects compensation for the damaged property. In such situations, not emotions, but how clearly responsibilities were agreed upon and what protection was chosen before the accident occurs, plays a big role. The more uncertainty, the greater the risk that even a small incident will turn into a long dispute,” says K.E.Karpova.
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Insurance is important not only for the owner
In such situations, home insurance becomes a particularly important aspect, but, according to K.E.Karpova, there is still a widespread myth in society that home insurance is only relevant to the owner.
“Some people still think that the insurance payout will be received by the one who concluded the insurance contract, but the most important thing is who owns the property itself. If damage is done to the dwelling or the owner’s furniture and equipment, the payout is made to the property owner, regardless of whether the owner or the tenant took care of the insurance. Their brought-in or purchased items – computers, televisions, bicycles, or other equipment – are usually not automatically insured. Therefore, it is worth taking care of additional protection or civil liability insurance,” states the director of BTA Insurance’s Claims Department.
Investment properties: not only returns but also risks are growing
As the investment property market grows rapidly, the attitude towards rental risks is also changing. K.E.Karpova notes that if earlier some owners viewed insurance as an additional expense, today more and more of them consider it a necessary financial protection.
According to the director of BTA Insurance’s Claims Department, people increasingly view investment property not only as an asset generating additional income but also as a responsibility that can bring unexpected expenses.
“One serious incident – a fire, flood, or damaged finish – can not only require thousands of expenses for repairs but also temporarily stop rental income. That is why people are increasingly looking for solutions that would allow them to protect not only the property itself but also their financial stability,” emphasizes K.E.Karpova.
