What You’ll Learn in This Article

• The difference between a deposit and insurance.

• When damages are paid from the deposit.

• When insurance applies and what it covers.

• The risks of relying on only one option.

The Deposit as the First “Safety Cushion”

According to Section 2254 of the Czech Civil Code, the deposit (security) secures the tenant’s obligations – including covering damage to the apartment or furnishings, if clearly caused by the tenant.
Note: The deposit is legally capped – up to three times the monthly rent – and if the damage is greater, the deposit won’t cover the full amount.

Insurance – When It Pays Off

Home insurance or personal liability insurance can cover damage caused to the rented property or to neighbours (for example, in case of flooding).
Key facts to remember:

• Insurance does not cover normal wear and tear.

• Some damages are excluded from coverage (e.g., intentional damage).

• The payout may be reduced if the obligation to maintain the apartment properly was breached.

Which to Use in Practice

• Smaller damages (e.g., cracked tile, damaged furniture) are usually covered from the deposit.

• Major damages (e.g., fire, major flooding) are covered by insurance, if in place.

• If damage exceeds the deposit and no insurance exists, the tenant must pay the difference out of their own pocket.

Risks for Tenants and Landlords

• For tenants: without insurance, even a small accident can lead to debts in the tens of thousands.

• For landlords: if they don’t require the tenant to have insurance, they risk not getting damages above the deposit reimbursed.

Lawyer’s Recommendation

💡 Include in the contract how damages will be covered and whether the tenant is obliged to have insurance.
💡 Request a copy of the insurance policy when signing the lease.
💡 Don’t rely solely on the deposit – three months’ rent may not be enough for major damages.