Posted by Teresa on June 28, 2010 under Landlord Tips | 
Lots of landlords and property management companies require tenants to hold renter’s insurance. It’s a good idea for these reasons:
- Fewer hassles for landlords if disaster strikes
- Provides a layer of protection for the rental property owner
- Peace of mind that tenants are protected in case of fire or other accidental loss
- Often, only renter’s insurance covers a tenant’s dog
But what if a tenant’s policy is cancelled or allowed to lapse through non-payment of premiums. What about tenants who drop policies to save money—unbeknownst to you, the landlord?
Landlord Protection Begins with the Lease
When your lease is written properly, the tenant knows exactly what is required. Make certain that all tenants’ rental insurance policies name the property owner as an additional insured. Then, if the policy is cancelled by either the tenant or the insurance company, you should receive an alert.
Your lease should state the details for what is required of tenants and the consequences (including eviction) if they allow renter’s insurance policies to be cancelled or lapse. Certainly, you should expect gaps in tenant coverage when payments are late or forgotten. But as a landlord, you must be prepared to enforce the terms of the lease. What action does your lease require?
Be Consistent with Lease Requirements
When enforcing leases, it is most important that landlords and property managers are consistent. Allowing some tenants to slide on rental insurance coverage while evicting others for the same offense could lead to charges of discrimination. You don’t want to encourage any such accusations by uneven enforcement of your rules.
When requiring renter’s insurance in your rental property, treat it like any other lease requirement. When tenants break the lease, take your usual enforcement steps. Luckily, renter’s insurance is often available for low monthly payments—and after all, if a tenant can’t afford it, they might not be the ideal tenant for your rental property!
Posted by Teresa on March 12, 2010 under Landlord Tips, Landlord and Tenant FAQs |
Not every landlord or property management company requires tenants to hold renter’s insurance policies. And according to some reports, the majority of tenants do not have renter’s insurance. What are the advantages to requiring tenant insurance? Are there any disadvantages?
First, the cost for renter’s policies is solely borne by the tenant, and is only $15-$20 per month, on average. So, while there are those tenants who cannot afford it, are they the best fit for your rental properties? An insurance requirement automatically screens out the potential tenants who have financial difficulties.
What’s in it for the tenant? Just as homeowners who have property insurance to protect against loss due to fire, injury or natural disaster, tenants with insurance enjoy a level of protection and peace of mind that is well worth the investment. In the event of a fire, for example, replacement property can easily be obtained, helping the tenant begin again with necessities like furniture and clothing. Some policies offer temporary housing coverage, so the tenant can stay in a hotel worry-free.
Now, let’s imagine that the fire in this example was caused by the tenant’s negligence. Without insurance, the tenant would be responsible for reimbursing the landlord’s insurance company for any damages caused by the fire—which could be tens of thousands of dollars. With renter’s insurance, the tenant and landlord are both covered.
What’s in it for the landlord? Certainly, landlords who require tenants to carry insurance will have fewer hassles in the event of a disaster. Tenant insurance also adds a layer of protection when a visitor is injured in a tenant’s unit, for example. That visitor will likely seek damages from the tenant’s policy, rather than the landlord’s. If an uninsured tenant’s negligence results in major damage (like a flood or fire) to a multi-unit building, the landlord would be liable for all damages to the structure as well as other tenant’s injuries or losses.
Rental property owners—there are many advantages of requiring tenants to hold renter’s insurance—with more than just minimum coverage. Think about the potential for large losses due to the tenant’s negligence, and have your insurance agent advise on the minimum. Just make sure to require the same for all tenants. Together, the owner’s and tenant’s policies offer both parties a broader range of protection.
Lots of landlords and property management companies require tenants to hold renter’s insurance. It’s a good idea for these reasons: