Being a landlord comes with multiple responsibilities. From annual gas safety checks and protecting your tenant’s deposit, there’s a lot to think about, including insurance. To make sure you’ve got appropriate cover for the property you rent out, here’s what you should know about HMO insurance.
What is an HMO?
HMO stands for house in multiple occupation and its official description is:
- A property with at least three tenants that form more than one household. A household is classed as a single person or people of the same family living together.
- A property with shared toilet, bathroom or kitchen facilities.
Large HMOs are those with five or more tenants, forming more than one household. If you own a large HMO, you’ll need a licence from the local council.
What is HMO insurance?
HMO insurance takes into account the specific hazards associated with renting a single property to several different households. HMOs are also more likely to have a high turnover of tenants which can increase the risk of damage.
How is HMO insurance different from standard landlord insurance?
HMO insurance is bespoke and will be tailored to the needs of your HMO. Policies will consider the size of your property, the types of people you rent to (for example students who come and go or professionals who may stay longer).
Levels of cover for certain aspects may also be higher to ensure you’re adequately covered (particularly when it comes to public liability).
What does HMO insurance cover?
HMO policies are geared around your needs so no two policies are likely to be the same. Plus, remember that terms and conditions will inevitably vary between insurers so it’s vital that you check you’re happy with what your policy covers.
Typically, HMO insurance includes:
- Buildings insurance which covers the structure of your HMO and any permanent fixtures and fittings. This includes the walls, floors, drains, pipes, bathroom suites and fitted kitchens.
- Contents insurance for any moveable items that you supply throughout the HMO and in communal areas. For example, carpets, beds, sofas, wardrobes and any electrical items like a washing machine or dishwasher.
- Property owners' public liability insurance which covers legal costs and compensation if someone is injured or has their belongings destroyed at your property.
Like other types of insurance, you’ll also be given the option of adding on additional covers, for example:
- Accidental damage.
- Malicious damage.
- Home emergency cover.
- Loss of rent insurance, which will compensate you if your HMO is uninhabitable because of an event you’re insured for (like a fire or flood).
- Alternative accommodation, which covers costs if your tenants cannot stay in your HMO because of an insured event.
- Employers’ liability insurance to compensate anyone you employ if they become sick or are injured through working at your HMO. You must have this by law if you employ anyone in relation to your HMO (for instance, a cleaner or gardener).
How much insurance do I need?
Your buildings insurance should be enough to cover the cost of rebuilding your HMO. You can work this out with your insurer or hire a surveyor to calculate the costs for you. Alternatively, you can use the Buildings Cost and Information Service calculator to estimate the figure for you. It’s a free tool mainly used for domestic properties so if you’ve adapted your HMO, it may not be an accurate measure.
Similarly, contents insurance should be enough to cover the cost of replacing anything you provide. Be careful not to underestimate the items included in your HMO. Underinsurance can result in an even lower payout thanks to a formula called the condition of average; you can find out more in our guide to underinsurance.
When it comes to levels of cover on additional features, these are usually set by the insurer. For example, public liability is often offered at £2 million or £5 million. You can ask for more depending on your needs but it’s likely to mean paying a higher premium.
How much does HMO insurance cost?
Cost really depends on a number of factors and insurers will consider:
- Where your HMO is, and how many rooms there are.
- The type of property your HMO is, for instance, is it a shared house or has it been converted into bedsits.
- The number of tenants you have and the number of households.
- The type of tenants you rent to, for example, students, professionals, housing benefit claimants.
If you’ve chosen to add on extra features, these will also increase what you pay overall. Don’t forget that while price is important, so too is adequate insurance. Opting for a cheap policy might save you money now, but if it doesn’t include what you need or if the levels of cover are too low, you’ll be left footing the bill. If in doubt, always ask your insurer for their advice.
To help you find the best value for money for all your insurance needs, we’ve teamed up with Quotezone to bring you a wide range of quotes from leading UK insurers.
FAQs
On major disadvantage is that it is difficult to get any specialized care because the members must get a referral first. Any kind of care that is sought that is not a referral or an emergency is not covered.
Is an HMO allows the member to choose what doctor or specialist they want to see without a referral? ›
This means that an insured person cannot see a specialist without first receiving a referral from their PCP. Specialists to whom PCPs typically refer insured members are within the HMO coverage, so their services are covered under the HMO plan after co-pays are made.
How does a member of an HMO see a specialist? ›
You must have a referral to see a specialist or get most other services. Your HMO or medical group must approve many of your services before you can get them. Usually it is your primary doctor who gives you a referral and asks for pre-approval.
Why do patients on an HMO insurance plan need a referral to see a specialist quizlet? ›
Why do patients on an HMO insurance plan need a referral to see a specialist? Without a referral, the insurance will not pay for the specialist visit. The term gatekeeping was originally used in relation to health care by _____ in 1947.
Why do doctors not like HMO? ›
HMO plans frequently need primary care physicians to refer patients and have constrained provider networks, which may frustrate some physicians. Yet, HMO plans often have lower consumer out-of-pocket payments, which may appeal to physicians who wish to provide appropriate care.
What is a drawback to HMO insurance? ›
For you to receive covered care, you must see professionals within this group. This lack of flexibility is a disadvantage of HMO insurance plans because, without easily accessible in-network providers, covered care will also be inaccessible.
Why would someone choose HMO? ›
In exchange for a lower monthly payment, an HMO offers a narrower network of available doctors, hospitals and specialists. CareFirst has built its plans with patients' freedom to see the doctor of their choice in mind, and the HMO plan still covers a wider network of doctors than many other health insurance providers.
Which plan does not require referral? ›
With a PPO, or preferred provider organization plan, you don't need a referral to seek additional care. You have more freedom to choose which doctors to see, but out of network care will cost more. Health care question answered.
Who chooses a primary care physician and an HMO? ›
When you enroll in an HMO plan, you choose your PCP from a list in your area and in a certain medical group. In the case of a PCP, the group is called an IPA or Independent Physicians Association as opposed to a PMG or Primary Medical Group.
What is not provided by an HMO? ›
For HMOs, out-of-network services are usually not covered at all, except for emergencies. PPOs differ from HMOs in that PPO plans will usually provide some coverage for these types of services, but coverage for in-network providers will be much better.
Doctors often prefer PPOs because they offer greater reimbursem*nt rates compared to HMOs and have less administrative paperwork. Is a PPO a good thing? For many, a PPO's flexibility and coverage make it a favorable choice, but it comes with higher premiums.
Are HMO better than PPO? ›
HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.
Which type of insurance does not need a referral to see a specialist? ›
Exclusive Provider Organizations (PPO)
Generally, you do not have to use a primary care doctor. You must use providers in the EPO network. Most of the time, you do not need to get referrals to see specialists who are in-network.
Why do I need a referral to a specialist? ›
Doctor referrals factor into how quickly and accurately you get diagnosed and treated. Lastly, referrals help ensure you don't waste your time seeing a specialist you didn't really need to see.
Which type of insurance does not require a referral for a patient care and specialist? ›
Preferred Provider Organization (PPO): A type of health plan where you pay less if you use providers in the plan's network. You can use doctors, hospitals, and providers outside of the network without a referral for an additional cost.
What is one disadvantage of HMOs quizlet? ›
What is a disadvantage of HMOs? One disadvantage is that HMO's require you to see HMO- affiliated healthcare providers.
Why do HMOs have such a bad reputation? ›
Sadly, many HMOs are run by either incompetent or corrupt bureaucracies, thereby compromising necessary patient care in lieu of their bottom-line. That said, some HMOs are better than others, and both patients and doctors must do their due diligence to determine whether or not to participate.
What is not an advantage of an HMO plan? ›
The Primary Disadvantage of an HMO Plan
HMO plans do not give you the flexibility of the PPO plans that many people have become accustomed to using. You are limited to a smaller (typically local) network of providers – usually a particular hospital system.
What are some disadvantages of a managed health insurance plan? ›
Con: Lack of Freedom to Choose Own Providers
For many, the primary drawback of a managed care arrangement is the fact that employees are unable to choose their own care provider. They may select their own care provider from within the network and switch their doctor at least once if they feel the care is insufficient.
