Landlord liability insurance is essential for owners of rental properties or undeveloped land, as it protects against financial risks arising from third-party claims. A common question is whether these insurance premiums can be charged to tenants.

Legal Basis for Cost Allocation

Under the German Operating Costs Ordinance (BetrKV), landlord liability insurance premiums are classified as operating costs. This means landlords may include them in the tenants’ service-charge statement—provided the rental agreement explicitly allows this. Without such a clause in the lease, cost apportionment is not permitted.

Transparency and Fairness

When passing on insurance premiums, landlords must be transparent. The rental contract should list each operating-cost item in detail; vague phrases like “tenant bears all insurance costs” are insufficient. Only the actual premiums paid for landlord liability insurance may be charged—additional administrative fees or profit margins may not.

Practical Implementation

In practice, insurance costs are usually allocated proportionally according to an agreed key—such as living area or number of units. It’s advisable to specify these details clearly both in the lease and in the annual service-charge statement to avoid misunderstandings.

Conclusion

Allocating landlord liability insurance premiums to tenants is legally permissible and common practice, as long as the lease explicitly provides for it. A transparent, fair service-charge statement fosters a positive landlord-tenant relationship and shields both parties from unexpected expenses.

As an independent insurance broker, we at Rombey Capital are ready to help you secure optimal coverage for your property and guide you through the correct implementation of cost apportionment.