The owners and investors we work with are pretty smart, and they understand the need to insure their investment properties, whether it’s an apartment, condo, or a single-family home that they’re renting out. Good insurance protects you from liability and disasters.
Tenants are often under the impression that they are protected by their landlord’s insurance. This is not the case, of course, and it’s important that you require your tenants to have renter’s insurance before they move into your property.
Renter’s Insurance Covers Personal Property
The most important reason to require this type of insurance is to ensure your tenant’s belongings are protected. If a flood or a fire occurs at your property, a tenant’s personal belongings are likely to be impacted. The necessary repairs and replacements won’t be covered by your policy.
If tenants don’t know this and don’t have their own coverage, you can expect a lot of anger and frustration on their end. When you require that they have a renter’s policy in place, they’ll be compensated for their own loss after a covered event. The tenant’s insurance policy should pay to replace or repair damaged items.
Knowing that their claims will be paid will also encourage continued on-time rental payments. An angry tenant who lost all their electronics during an incident and didn’t have renter’s insurance to cover the loss is less likely to pay rent the following month.
Renter’s Insurance Lowers Liability and Lawsuit Risk
Tenants can cause damage and disaster at their home, even unintentionally. Landlords should not be left to bear the burden of all that liability. Perhaps a tenant will leave a pot on a hot stove, starting a fire. If there’s $10,000 in damage to the kitchen, you’ll want your tenant to be responsible for that, not you. If a tenant has guests over and someone becomes injured, a lawsuit may be filed by that injured party.
Liability insurance is almost always included in renter’s policies. In the above scenarios, the renter’s policy would likely pay for the kitchen repairs or the injured guest’s medical bills if the renter is found liable for the loss. As the property owner, you would not have to be named in the lawsuit at all, nor would you have to use your own insurance.
Renter’s Insurance is Inexpensive
Most tenants understand the importance of renter’s insurance, and you should feel comfortable explaining why you require it. There’s no need to agonize over costing the tenants more money. Renter’s insurance is extremely affordable. Most tenants won’t pay more than $15 or $20 per month for full coverage. If they have auto insurance, they can likely bundle the coverage and save some money.
Include the requirement in your lease agreement. You’ll protect yourself, your tenant, and your property.
