How to Secure Your Investment in France with Landlord Insurance

Types of Insurance

• Home Insurance
• PNO insurance
• Civil liability insurance (assurance responsabilité civile)
• Multi-risk home insurance (assurance multirisques habitation)
• “Garantie des risques locatifs” insurance policy
• Landlord Insurance Vs. Homeowners Insurance

• What type of insurance do you need?

Key Insurance Terms

• A Franchise
• The “plafond de garantie” or ceiling on reimbursement

• Clause “abandon de recours”

Handling Insurance Issues

• What to do in the event of damage?
• What landlord insurance doesn’t cover?

• Additional landlord coverage to consider

Additional Notes

Types of Insurance

Home Insurance

Home insurance (“assurance habitation”) plays a pivotal role in owning or renting a property in France. It protects property owners and tenants against situations that could lead to financial losses.

Whether you’re a landlord or a renter, you should strongly consider having insurance to shield yourself from incidents like theft, fire, natural disasters, water damage, and liability claims. With housing insurance, homeowners can protect their significant investment and enjoy peace of mind.

Not having this insurance could leave you on the hook for all the expenses from these events, which might be too much to handle and can affect your financial stability. Having home insurance gives you the confidence to deal with rent uncertainties, knowing that your home and possessions are safe.

If you are the owner, the law does not impose it, but it is strongly recommended.

Also, your insurance terms and conditions may contain exclusions. The package typically does not include disasters caused by flooding, infiltration of walls and windows, groundwater, or neglect of maintenance and surveillance. Thus, it is crucial that you read all of the terms and conditions before you sign your insurance contract.

Find out more details about house insurance in France from the French-Property online resource.

PNO insurance

PNO insurance, or Propriétaire Non-Occupant, is a type of home insurance designed for property owners who do not reside in their property (such as a house or apartment). It is commonly used by landlords who rent out their properties to tenants. The main purpose of PNO insurance is to offer protection beyond what the tenant’s insurance policy covers. This becomes necessary because the tenant’s insurance might provide very little coverage. Although it is recommended, it is not compulsory for a landlord to take out PNO insurance, except for co-owned property, in which case it is obligatory. 

Basic PNO Insurance Coverage

• Liability insurance safeguards the property owner in case their property causes harm to a neighbor’s property, the common areas of a building, or a third party in the absence of a tenant or when their insurance doesn’t include the claim.

• Comprehensive coverage includes protection against fire, water damage, theft, vandalism, broken glass, storms, natural disasters, and technological mishaps.

Additional PNO Insurance Coverage

1. Loss of Enjoyment (troubles de jouissance)
2. Construction defects
3. Neighbors and Third Parties’ Claims
4. Rental Income Loss

Civil liability insurance (assurance responsabilité civile)

The civil liability guarantee covers the damage a landlord or tenant causes to third parties. The warranty also covers damage caused to third parties by persons or things that the policy holder is responsible for.

Civil liability insurance is mandatory in France to cover any harm caused to another person or their property. Typically, this insurance is bundled with home insurance. You can subscribe to it separately or add it to your existing home insurance policy if it is not included.

Multi-risk home insurance (assurance multirisques habitation)

Under the law of July 6th, 1989, multi-risk home insurance is mandatory for tenants of unfurnished rentals. While not compulsory for homeowners, getting this type of insurance is highly recommended. Most traditional French comprehensive home insurance policies cover buildings, contents, and civil liability insurance.

When insuring a holiday home, you should notify your insurer in writing that it’s not your residence. Some policies may become invalid if the property is left unoccupied for extended periods, usually 90 days. However, many insurers offer contracts specifically designed for holiday homes.

Multi-risk home insurance offers assurances to protect the policyholder’s property (such as house or furniture) in cases where they’re at fault or a victim of damage. The key coverage areas of the MRH policy include:

1. Protection against damage to buildings and contents (furniture) the policyholder owns.

2. Coverage for liability if the policyholder (or insured individuals) accidentally causes harm to others.

3. Liability coverage for the policyholder as a homeowner or tenant. It covers damages caused by living there (to the tenant or the third party) or damage caused to the property or third parties like neighbors.

Good to know:

As part of property damage, you should always review the contract’s general terms and conditions to understand the risks your MRH covers better. The following are typically covered under the warranties in an MRH contract: fire, explosion, water damage, theft, vandalism, broken glass, natural catastrophes, terrorist activities, or attacks.

“Garantie des risques locatifs” Insurance Policy

One way for a landlord to have peace of mind is to get an insurance policy that protects against tenants not paying their rent. These types of policies known as “garantie loyers” (GLI) or “garantie des risques locatifs” are available from insurance companies in France like Macif, Sacapp, Solly Azar, PGA Assurances and Suffren Assurances associées (SAA). Some banks, like Crédit Agricole, Crédit Foncier, LCL, and Société Général, also provide these policies.

Furthermore, most contracts cover expenses related to actions against tenants to recover overdue rent in addition to covering the loss of rental income.

Note: Insurance policies generally have conditions and limitations, so landlords shouldn’t rely solely on them. Most policies will contain an ‘excess’ clause, wherein the landlord must also consider taking a security deposit to cover at least this amount.

Landlord Insurance Vs. Homeowners Insurance

There are several similarities between homeowners’ insurance and landlord’s insurance. Both provide liability insurance and coverage for homes and other structures. However, landlord insurance offers additional protection.

For instance, while homeowners’ insurance does not provide coverage for loss of rent, landlord insurance policies offer additional coverage for unpaid rent and other landlord-specific add-ons.

What type of insurance do you need?

The type of insurance you need as a landlord depends on the rental. Here are the differences.

Key Insurance Terms

A Franchise

You have undoubtedly heard of the deductible (sometimes known as the “franchise”) amount if you have previously signed an insurance policy. This is the amount of money you must pay out of your pocket before the insurance company helps cover the rest of the costs.

The insurance contract will clearly state the amount. For instance, if your deductible is €500 and you file a claim for €2,000 in damages, you’ll need to cover the €500 while the insurance will cover the remaining €1,500.

Typically, a lower-cost insurance policy comes with a higher deductible. This means that if an incident occurs, you’ll have to pay more upfront, even though the insurance covers most of the expenses.

The “plafond de garantie” or ceiling on reimbursement

You must determine the worth of your possessions when you buy your insurance policy. Be careful—the insurer won’t have to pay more than you have stated if you underestimate your belongings. The insurance premium’s price will also be determined by the number of items you want to insure.

Clause “abandon de recours”

If a tenant unintentionally damages the rental property, landlord insurance may be able to cover the damage. For example, if a kitchen fire damages the apartment, the landlord’s policy could reimburse you.

Another approach for the landlord could be to take out a policy called “pour le compte de qui il appartiendra” (“for the benefit of whomsoever it may concern”) with an “abandon de recours” clause. This clause explicitly covers damage caused by tenants. This arrangement would mean that the insurance company would handle incidents and directly manage any claims against the tenant. Although this may come with a premium, there’s no guarantee that the insurer will agree to it.                         

Handling Insurance Issues

What to do in the event of damage?

You have to react quickly. Contact your insurer to report the claim as soon as possible and call an artisan to take emergency measures so that the damage does not get worse. If you don’t react quickly, your insurer or the damage victims could accuse you of negligence. Also, your insurer could refuse to take over a part or the whole amount of damage, and your neighbors could sue for payment of damages.

What landlord insurance doesn’t cover?

Generally speaking, landlord insurance does not cover damage to the renter’s personal belongings. For instance, landlord insurance does not cover tenants’ possessions if their furniture is destroyed in a fire. For that, the tenant needs renters’ insurance.

Sometimes landlord policies exclude certain problems, such as:

• Earth movement, such as earthquakes;
• Volcanic activity;
• Erosion;
• Mudslides;
• Water damage due to a sewer or drain backup;
• Neglect;
• Acts of war;
• Asbestos removal.

Additional landlord coverage to consider

Landlord insurance might include other coverage options within a policy as well. Some optional additional coverages that are often available for inclusion in a policy are:

Landlord insurance may also include coverage options within the policy. Here are some extra coverages that are often available for you to add to your policy;

Theft Protection

Optional theft coverage can provide compensation if your property is stolen, such as a stolen lawnmower. While a standard landlord insurance policy typically covers damage to your belongings kept or used on the property, it usually does not include theft protection.

Vandalism

This additional coverage can reimburse you for damages caused by vandals. Standard landlord policies generally do not cover vandalism incidents.

Building Upgrades

If you need to repair damage to comply with building standards, optional insurance coverage can help cover the costs of these improvements.

Flood Protection

Similar to homeowners’ insurance, landlord insurance does not cover flood damage. For this type of protection, you’ll need optional flood insurance.

Other Coverage

Additional coverage offered in a landlord policy might include:

• Debris removal;
• Fire department service change;
• Trees, shrubs and plants;

• Collapse of property.

Landlord insurance and tenant insurance cover different things and people. Landlord insurance covers the property owner and handles the structure and physical apartment units. Tenant insurance is for the tenant and covers the renters’ belongings.

Tenants’ personal belongings are not covered by landlord insurance.
It’s a frequent misperception that renters’ belongings are covered by landlord insurance, but this is not true. The actual building is covered by landlord insurance, but personal belongings like clothing, furniture, appliances, electronics, etc., are not.

So, to sum it up, landlord insurance covers the owner for liability claims involving common areas and the building. Renters insurance covers the renter for liability claims that take place within the unit or involving the individual.

Additional Notes

• Landlord insurance and tax

The landlord insurance cost is deductible from your taxes. You can find out more information in our summary Tax on Rental Income in France: Tactics for Better Results.

• Managing Agents

Lastly, landlords could consider hiring managing agents as an other way to get their insurance. One advantage of this tactic is that landlords can benefit not only from property agents’ expertise but also from lower insurance premiums, as managing agents have access to policies only available to property professionals.

• Valuing your property

Make sure to calculate the value of your rental asset so you know how much coverage you need in case of damage.

Please note: This article does not constitute legal advice – the information on this page has been prepared solely for your information. As we are not a law firm and act as a platform, we can and may share our estimations, but we cannot give you legal advice for your individual further proceedings.