Of course, rental property owners carry insurance protection on their properties to protect themselves from liability and loss. Most policies cover damages and accidents that occur on the property, but not the tenants’ possessions.
Tenant’s insurance, or renter’s insurance, covers personal property in a rental home or apartment against fire, theft, water damage (but not flooding) and vandalism. It also protects tenants in the event that someone is injured in their unit.
It’s a good idea for tenants to buy an insurance policy, but can landlords require it? Absolutely! In fact, many do and for good reasons:
- Tenants with renter’s insurance will be less likely to try to sue the landlord in the event of a loss or injury, since they have their own coverage.
- Renter’s insurance can protect rental property from tenants’ misuse or negligence. For example, if a tenant floods the unit, his or her insurance will pay for the cleanup. Those without renter’s insurance could just move out and leave the mess for the landlord to deal with.
- Having tenants with their own insurance can help landlords avoid claims on their own policies.
- Renter’s insurance can protect tenants and landlords against claims in case of dog bites from tenants’ pets. The renter’s policy can cover the claim, so the injured party is less likely to sue the landlord.
- The peace of mind in knowing your tenants are covered in case of a fire or other disaster can be worth its weight in gold. Insurance proceeds can replace clothing, furniture and other necessities, as well as pay for living expenses in case tenants have to temporarily relocate.
If you do require renter’s insurance, make sure it is clearly explained in the lease agreement. It’s also a good idea to be named as a secondary insured, so you can be notified of lapses in coverage.
The cost of renter’s insurance is often less than $20 per month. If you have prospective tenants who balk at the insurance requirement, perhaps they are not qualified to live in your properties!