Property damage: When does insurance cover it?

Due to property damage, moving out of a rented apartment can be expensive – tenants are asked to pay for one thing after another. So having good liability insurance is very important! But be careful: even your insurance won’t cover every claim.

Jürg Zulliger

Just like everything in life, there are hundreds of kinds of tenant damage: sometimes it’s when the tenants or one of their guests has a malheur as they’re hosting their goodbye drinks. Perhaps they inadvertently knock over a bottle of antique red wine. Perhaps somebody manages to spill a drop of the expensive wine on the carpet. It’s just as annoying as it is inconvenient: on moving day no one wants to clean any more than they already have. And for many tenants, the transfer, all the formalities and discussions about damage to the rental property or missing items, are already inconvenient enough.

Property damage: When does insurance cover it?
Red wine stains on the carpet? Insurance often covers liability and damages to rented properties. (Picture: fotolia)

Insurance covers the costs of damage to property

It’s very important to tenants that they have good personal liability insurance, says Kim Allemann, Furniture Media Spokeswoman.“Personal liability insurance is one of the most important kinds of insurance to have. It covers the costs of damage that is charged to any third party.” As a tenant you are liable to the landlord for any damage sustained by the rental property.

In the first hypothetical scenario with the red wine stains on the carpet, for example, your insurance would bear the brunt of those costs. This insurance is also particularly important because they also step in when it comes to legal liability claims—if damage to people or to objects is to be negotiated. Liability claims for personal injury can add up to millions!

Liability insurance for a family or a household with children under the age of 18 only costs around 150 to 200 franks (premiums differ greatly depending on the insurance.) A good investment considering the high liability claims it covers. Liability insurance often covers damages to rental housing in the case of damage caused by tenants. These things often simply  happen in daily life, but the tenant is obliged to hand over the property in good condition on moving day.

Property damage: When does insurance cover it?
Textbook liability cases: When a ball suddenly comes flying through your window. (Picture: Mobiliar)

Damages to property: Real life examples

When it comes to damage done by the tenant, private liability insurance would cover the following costs/ damages.

  • The kids are playing outside and one of them accidently kicks a ball through a window. The glass has to be replaced.
  • As you’re cooking, a spice jar falls onto the kitchen stove breaking the ceramic glass hob and the glass cover has to be replaced.
  • One day you simply forget to close the window in the living room. Now of all times it suddenly starts to storm and heavy rain causes water damage on the floor.
  • You knock over a glass of wine on the carpet. The carpet has to be replaced.
  • A perfume bottle falls into the sink and damages the enamel. The sink has to be replaced.
  • On moving day, a heavy screwdriver falls onto the floor and puts a dent in it. Some of the floor has to be replaced.
  • In the nursery, splashes of paint on the wallpaper are visible. The wallpaper must be replaced or repainted.

What the insurance does or does not cover always depends on the individual claim and the specific circumstances. Hans Bättig, Rental Rights Expert and lawyer maintains that, ‘the insurance often steps in to cover accidents and sudden occurrences. The payments would also depend somewhat on whether and how often the policyholder has already made prior claims. If a policy is "unencumbering", according to Hans Bättig, most insurance companies would probably cover damage to the sink or the glass ceramic purely out of goodwill.

Property damage: When does insurance cover it?
Moving day: For compensation tenants have to pay - or the insurance

Damages to property: sudden or gradual?

However, damages that are caused by overuse or that develop gradually are not covered by insurance. The same goes for damages that are caused deliberately, purposefully or result from gross neglect. The textbook example for this kind of gradual damage that no insurance company would pay for might be: dark marks on the walls that can be traced back to direct contact with smoke. In this case, it’s clearly not just a one off, but gradual damage that has been caused over the tenancy period.

A damage expert wouldn’t say anything different about damages to the floor if they were clearly not consistent with the signs of a storm. If the damage has come about over the course of years, from watering plants, for example, this would not count as a case for the insurers.

Similarly in the case of damages caused by pets—if dogs or cats have been scratching the floor for years, it could result in major expenses a few years down the line. The landlord might even ask that you entirely replace the scratched floor. Due to the fact that the damage was neither unforeseeable nor sudden, there is likely no insurance company who would pay for it. ‘There are extreme cases, it must be said, where some damages can be traced back to the imprudent handling or lack of supervision of pets,’ says Hans Bättig. In these cases the liability insurance of the tenant is not responsible for this payment. Discussions about wear and tear and damages when handing over a property are often awaited in real dread. However, questions about the carpet, and if the flat is tidy enough also come up often. Clearly, insurance would be of little help in these cases.

Ruedi Spöndlin, a lawyer for tenants and tenants’ associations draws the line between payments to be made by the insurance and costs that should be borne by the tenant. In general, a private liability insurance company takes on the liability for damages on behalf of the tenant. ‘However, there are also cases,’ admits Spöndlin, ‘in which in which the insurance does not pay, even though the tenant is liable.’ This might happen, if say, the damages are not covered in the insurance company contract. Spöndlin gives the following as example cases of damages caused by the tenant:

  • The tenant has done nothing to prevent or has deliberately caused damage (making nicotine marks, colouring the walls, drilling holes).
  • So-called ‘gradual damages’ are usually uninsured (e.g. smoke marks, if the tenant has constantly lit candles in the apartment).
  • The damage is lower than the deductible according to the insurance contract.

Our recommendation: It’s really worth checking the premiums and provisions in the contract (the small print) and to carefully read and compare the terms and conditions. Since damages caused by tenants make up a large portion of payments in liability cases, insurance companies often ask for higher premiums for rental households than homeowners. Our tip: the most important thing is to check how much the deductible is. Some companies take a deductible of a e.g. 300 francs claim per room, per case. For example, if there is a claim of 1200 francs spread across various rooms, the insurance may not make any payments at all.

Property damage: When does insurance cover it?
Water damage on the floor: a case for liability insurance if the damage was caused by a storm. (Picture: fotolia)

Take life expectancy into account!

As always with tenancy law, life expectancy is very important. In insurance terms, this means you will only be compensated for the ‘time-value’ of an object. The insurance payment is based on the service life table from the Tenants and Homeowners Association. For example, emulsion paint has a lifespan of eight years. The tenant, and the insurance company on his behalf, must take on some of the costs depending on the life expectancy of the paint. If, for example, after 6 years, the nursery needs a new coat of emulsion, the insurance company would only pay for 25 percent of the costs (three quarters of the paint’s expected lifetime have already passed.) This calculation is made under the assumption that it is indeed emulsion paint and the room was actually renovated or repainted six years ago.

The same principle applies with the refrigerator example. If a refrigerator with a separate freezer compartment has a service life of 10 years according to the service life table. If, for any reason, the device has to be replaced after five years (due to damages that are attributable to the landlord), the landlord may not be charged more than half of the costs.

Conclusion: your moving day doesn’t have to be an awful ‘day of reckoning’. If you prepare well and know your rights and responsibilities, you can move into your new home without half as much of the hassle.