Why Landlords Should Require Renters Insurance
As a landlord, you have many responsibilities. Collecting rent, maintaining your units and being properly insured — to name a few. But one of the things you typically aren’t responsible for is covering the personal property of your tenants in the event of the unexpected. That’s where renters insurance comes in.
Protecting your tenant’s personal property isn’t the only case for renters insurance. Let’s find out how renters insurance not only benefits your tenants, but ultimately benefits you as a landlord.
What Is Renters Insurance?
Many tenants assume that their landlord’s insurance policy will cover their personal property if the building faces damages, like from a fire. But this is a common misconception.
The reality? As a landlord, you’re usually not responsible for damage or theft to your tenant’s personal property. For instance, if there was a fire at your property, you’d be responsible to cover the damages to your building but not for the damages to your tenant’s personal property.
Renters insurance is carried by the tenant and provides them with personal property, liability and loss of use coverage. What does this mean?
- Your tenant’s personal property is protected from things like fire, smoke and theft.
- Your tenant is protected if they accidentally cause damage to your property, like starting a fire in the kitchen.
- If your property is damaged and your tenant needs to move out while repairs are being completed, their renters insurance will pay for temporary living arrangements.
Can a Landlord Require Renters Insurance?
Renters insurance is not required by law, but as a landlord, you can require tenants to purchase their own insurance policy. You can do this by including a provision in the lease that requires your tenants to have proof of renters insurance and ensure that it remains active during their entire tenancy.
How Should a Landlord Tell Tenants Renters Insurance Is Required?
Many landlords are choosing to make renters insurance a requirement for their tenants. Be transparent and let potential tenants know of the requirement right away. Make it known in your listings, indicate it when showing your unit and include it in the application process. If it’s a renewal lease and you’re adding renters insurance as a requirement, you can let your tenant know with a letter. You’ll of course need to include the requirement in your lease.
Should a Landlord Require Renters Insurance?
Requiring your tenants to have renters insurance clearly benefits your tenants. But how does it benefit you, the landlord?
Reduces your responsibility. When you require your tenant to have renters insurance, it reduces the chance that your tenant could ask you to pay for damages. And if your unit becomes temporarily unavailable after something like a fire or other disaster, your tenant can use their renters insurance to find temporary housing — this way you don’t have to deal with the hassle as well as your own loss.
Lessens the threat of a lawsuit. If a tenant doesn’t have renters insurance and their belongings face damage because of an event that’s covered by your insurance policy, they may try to claim that you’re responsible for covering the cost of damage to their property. But if you require renters insurance, you can avoid heading to court since their renters insurance will cover their personal property.
Filters out tenants. If a tenant can’t afford renters insurance, can they afford to pay rent? Requiring renters insurance helps you find good tenants who are more likely to pay rent on time.
Provides peace of mind. When you require your tenant to have renters insurance, there is a load of responsibility taken off your shoulders — and that equals peace of mind!
How Your Tenants Can Get Renters Insurance
So how can your tenants acquire renters insurance? It’s simple. They likely have car insurance for their vehicle — all they need to do is go online or call up their insurance company and add it to their policy. In fact, they could even get a discount for bundling insurance products, like having a car insurance policy and renters insurance policy with the same company.
Renters insurance is affordable for your tenant too — it often costs no more than one dinner out per month! When you educate your tenant on the benefits of renters insurance, they’ll likely be more susceptible to your requirement. It’ll save both of you headaches down the road!
Learn more about why your tenants need renters insurance and then make sure your landlords insurance is doing its best to protect your units by connecting with an American Family Insurance agent. They’ll walk you through your policy and ensure you’ve got the customized coverage to protect everything you work hard for.