The ultimate guide to malicious damage insurance for landlords

May 23, 2024
The ultimate guide to malicious damage insurance for landlords

Fortunately for landlords, the vast majority of tenants look after their rental property as if they owned it and would never dream of causing damage on purpose. But in a minority of cases tenants, their guests or even a third party do cause malicious damage.

Whether it’s a disgruntled tenant taking out their frustrations on the landlord’s property, damage inflicted when tempers flare in a domestic argument, or vandalism by a third party,  malicious damage is a risk you need to be mindful of when taking out your landlord insurance. Broken windows, vandalised doors, mangled furniture, graffiti and arson all result in damage that’s expensive to put right. In fact, malicious damage claims at Total Landlord tend to be high value claims averaging over £7,000.

What exactly is malicious damage?

At Total Landlord, we’re noticing that landlords often confuse general accidental damage, wear and tear and poor standards of cleanliness with malicious damage. So, what exactly is malicious damage, and how is it different from other types of damage?

Malicious damage is a deliberate action or act of vandalism that results in damage, regardless of whether the end result was intended. For example, if damage is inflicted by someone in a moment of rage, that would count as malicious damage. Accidental damage, in contrast to malicious damage, is not caused by a deliberate action but purely by accident. Objects are dropped, sinks overflow and windows get smashed - the list of potential accidents that can happen in a home is endless.

The difference between malicious damage and accidental damage

Sometimes it is difficult to distinguish between accidental and malicious damage: did that burnt hole in the carpet result from a carelessly discarded cigarette, or was it stubbed out deliberately? Was the glass tabletop broken when someone dropped a saucepan on it, or was the saucepan smashed into it? Was the door flung off its hinges in a temper, or did a sudden gust of wind fling it too far back?

The difference between malicious damage and fair wear and tear

What a landlord considers to be ‘damage’ may actually be classed as ‘fair wear and tear’. When tenants occupy a property over a long period of time things inevitably wear - walls get stained and scratched, colours fade and carpets become worn. This is known as wear and tear, and cannot reasonably be avoided. So, fair wear and tear is something the landlord needs to allow for, as part of the business of running rental properties. And of course, the longer the tenancy, or the more tenants there are in the property, the greater the wear and tear you can expect. For more guidance read mydeposits guides, ‘Fair wear and tear – what is it and how is it applied?’ and ‘A guide to the life expectancy of rental property products’.

Landlord insurance and the importance of malicious damage cover

It is so important to take care when selecting your tenants, doing all the due diligence that you can. But, no matter how meticulous you are - referencing tenants and communicating with them regularly, making sure the property is safe, warm and in good repair, and carrying out regular inspections while also giving your tenants privacy - some will become disgruntled, resentful and destructive. While thankfully these tenants are in the minority, their actions against your property could cost you thousands to put right. And you can’t possibly predict a random act of vandalism by a third party. That’s why you need a good landlord insurance policy that includes cover for malicious damage.

Malicious damage insurance claims

The highest claim ever paid out for malicious damage by Total Landlord was for £44,289. This was for damage caused by tenants creating a cannabis factory in the rental property. Although the cannabis claim was an extreme case, the value of malicious damage claims is on the rise – it increased by 22% from £5,873 during the period 2015 to 2020, to £7,190 during the period 2019 to 2024.

It’s vital to take preventative measures to reduce your risks of malicious damage, as well as making sure you have comprehensive landlord insurance cover in place.

Who is liable for malicious damage to a rental property?

As the landlord, you are legally responsible for the repair and maintenance of your property. Even if malicious damage to your property has been caused by tenants, the responsibility for fixing it will always fall to you.

Can malicious damage be deducted from the deposit?

If your property is not returned in the same condition as it was at the beginning of the tenancy, and there is evidence of damage, whether it’s accidental or malicious, then you may be able to deduct costs from the tenant’s deposit rather than claim on your insurance (but remember, there is usually an excess payment to pay when you claim). This mydeposits case study, which also relates to damage caused by suspected cannabis growing, explores this scenario in more detail.  

Any deductions from the deposit must always allow for fair wear and tear, and sometimes the deposit may not cover all the damage, depending on the extent of it. Sometimes malicious damage is so extensive that landlord insurance is needed both to cover the repairs and the loss of rent while the property is being repaired.

Does landlord insurance cover malicious damage?

Some landlord insurance policies will only cover you for damage caused by third parties who are not legally allowed to occupy the property, not tenants or their guests, so it’s important to check your policy to see whether you’d be covered if tenants, guests or a third party cause malicious damage to your property.

Total Landlord Insurance’s Premier policy offers extensive property disputes support and covers malicious damage caused by tenants and their guests; up to £5,000 for contents and £25,000 for buildings, so you’re covered for almost any eventuality.

“Our Premier policy offers protection against malicious damage by tenants and their guests, as well as cover for loss of rent resulting from the need to carry out repairs. Bear in mind, you will need to provide evidence that you did all you could to mitigate against the damage before we can pay out for a claim. For example, you will need to show that your tenant passed a full and robust reference check and that you carried out regular inspections on your property; claims will not be paid out if landlords aren’t carrying out inspections or completing full referencing checks.”
Steve Barnes, Head of Broking at Total Landlord

So, while having the right insurance offers peace of mind, it’s important that you do all you can to minimise the risk and protect your property as best you can against malicious damage happening in the first place.

Minimising the risk of malicious damage

As always, when it comes to managing your rental property, prevention is better than cure. Fortunately, there are steps you can take to reduce the chance of a tenant maliciously damaging your property.

1. Carry out a thorough reference check

Carrying out a comprehensive tenant referencing check and making sure that you or your agent meet and interview the prospective tenants before accepting them is vital. A good reference agency such as TenantVERIFY will process previous landlord and employer references on your behalf, as well as credit history checks.

Malicious damage insurance cover is generally subject to the tenant passing full referencing and credit history checks, and to reduce the risk further you might consider asking the tenant for a guarantor. Find out more about this option in our article, ‘What is a guarantor and who can be one?’

A four-step tenant reference process is best practice and a requirement at Total Landlord. It should include:

Photographic identification (take a copy and for joint applications make sure you obtain ID from all applicants). You will need this for the right-to-rent checks in any case

A utility bill or bank statement as proof of residency at the tenant’s current address

A credit history check will confirm that the prospective tenant is clear of any county court judgements (CCJs), bankruptcy or debt repayment arrangements

Confirmation of employment through an employer’s reference shows the tenant’s employment status and their earnings capacity, with a salary that should be at least a multiple of 2.5 of the rent. It’s also a good idea to obtain their email address and a mobile phone number of all prospective tenants and make sure it’s genuine

Always use a comprehensive tenancy application form, which should provide you with all the written information needed to carry out these checks without having to constantly refer back to the tenant. For more information see our ‘Ultimate guide to tenant referencing for landlords’.

2. Compile a robust inventory

It’s important to be clear and transparent at the outset of a tenancy - a comprehensive and robust inventory will help to safeguard the interests of both you and your tenant should the tenancy end in a discussion over damage caused to the property. If possible, you should use a good independent inventory company. At Total Landlord, we are partnered with No Letting Go.

The check-in inventory (along with mid-term inspection reports) and the check-out report, will be the primary pieces of evidence for negotiating. Without a robust inventory you will have no evidence to negotiate a claim, which makes it much harder to prove that the tenant caused the damage. Make sure your check-in reports are completed before or when the tenant moves in, and check-out reports are completed ideally at the time the tenant moves out.

The inventory should:

• List each item and area in the property along with details of its condition

• Include photo and video evidence to support written descriptions; these should be time and date stamped and incorporated into the written report

• Include short but explanatory written descriptions

• Ideally you or the agent should walk through with the tenant making sure they agree with the written inventory

• The inventory should be signed by you or the inventory clerk and the tenant and initialled page by page. At the very least you will need evidence that the tenant received the check-in report and had the opportunity to make any amendments

For more information, see our ‘Ultimate guide to a landlord inventory and schedule of condition’.

3. Establish a good working relationship with your tenants

If you have a good relationship with your tenants, they are far more likely to treat your property with respect and report any damage to you immediately. It’s important to be attentive to your tenants and well worth taking the time to nurture the relationship from the start, though without being too intrusive. After all, it is their home while they are renting. It’s a good idea to:

• Be accessible by providing your tenants with clear and direct lines of contact

• Communicate clearly about your expectations and listen to your tenants

• Explain what to do if things go wrong

• Be understanding of your tenants’ needs

• Be reliable and deal with any issues promptly

You can get the tenancy off to a solid start by providing a welcome pack.

4. Carry out routine inspections

Regular mid-term external and internal inspections of the property, as agreed with the tenant, will give you insights into how well your tenants are looking after the property. They will also help you to get a general impression of the level of wear and tear and enable you to schedule maintenance works promptly where needed. You should:

• Agree an inspection schedule when you start the tenancy

• Carry out a first inspection within a month of the tenant moving in and then once every six months, even if you have a long-term tenant

• Provide at least 24 hours’ written notice of an inspection

• Agree a time of day which is convenient to the tenant, ideally when it’s light so that you can inspect the interior and exterior of the property

• Take along the inventory report so that you can compare the condition

• Keep records of inspections, including photographic evidence to show what has been identified and fixed, along with dates of every inspection

• Have an inspection checklist so you don’t miss anything and this provides a good record.

• Make sure tenants sign and date your inspection reports to agree that they’re happy with the findings

Read our ‘Ultimate guide to inspecting your property’ for more information.

5. Ask for a security deposit

Although you don’t have to take a deposit, your tenant is arguably less likely to cause damage if their deposit money is being held. A deposit also offers you some protection if your property is damaged. If you do take a deposit from your tenant, you are legally required to protect it in one of the Government’s authorised schemes such as mydeposits, which like Total Landlord is also powered by Total Property, within 30 days of receiving it. Don’t forget to serve your tenant with the necessary statutory information that goes with the deposit scheme legislation. Deposits are capped at five weeks’ rent where the annual rent is below £50,000 and six weeks’ rent where the annual rent is £50,000 or more. See our ‘Ultimate guide to tenancy deposit protection legislation’ for more information.

6. Carry out regular maintenance and make sure your property is secure

If you present a neat and tidy rental property which is secure and well maintained, it is more likely that tenants and their guests will treat it with the respect it deserves. Tenants might be less inclined to look after a property that is scruffy and where repairs have not been carried out. Choose durable flooring and furnishings that are easy to clean and consider investing in CCTV or security lights to deter vandals. Our ultimate guide to keeping your property safe and our guide to landlords’ and tenants’ maintenance and repairs responsibilities contain lots of useful tips.

What should you do when there has been malicious damage to your rental property?

Malicious damage is a crime and should be taken seriously. If, despite your best efforts, you discover that your rental property has been damaged maliciously, it’s important to take the following steps:

• Report the damage to the police and obtain a crime reference number

• Take time and date stamped photos of the damage

• Make sure the property is safe and secure

• Contact your insurers to notify them of the damage

Can you evict your tenant for causing malicious damage?

Rental property damage is recognised as a discretionary ground for evicting a tenant in England and Wales, under the Housing Act 1988 and you can serve notice on them for this reason. If your tenants do not leave by the specified date, you’ll then need to apply to the court for a possession order. The more evidence you have the better.

The law in Scotland is different – the Private Residential Tenancy Act 2016 covers evictions, and although property damage isn’t one of the law’s 18 grounds for eviction, a breach of a tenancy agreement is. As with England and Wales, you must serve notice on your tenants to leave the property for this reason.

Landlord Action, also powered by Total Property, is one of the UK’s best known eviction and housing law specialists, and will be able to help you if you need advice about regaining possession of your rental property.

Make sure that you are covered for malicious damage

As the landlord, it’s up to you to show that you have done all you can to reduce the risks of malicious damage. You’ll also need to provide evidence of the steps you have taken.

“Many of the issues landlords experience can be prevented through regular inspections, timely maintenance and establishing good channels of communication with your tenants.
But no matter how well prepared you are, the unexpected can still happen. This is why we recommend that you have the right insurance in place to provide comprehensive cover. With the average cost of malicious damage claims on the rise, it’s particularly important that landlords check whether their insurance policy includes malicious damage by tenants and their guests as standard or as an extra cost. Knowing you are covered for damage, be it by theft, accident or malice, should bring you peace of mind.”
Steve Barnes, Head of Broking, Total Landlord

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