Why You Should Require Your Tenants to Purchase Renter’s Insurance
Oct 6
posted by Jeff LeVan in
Landlord Advice
| 0 Comments
Most landlords suggest renter's insurance to tenants. It's one of those things that everyone "should have," but few people actually do. In fact, only about 35% of renters have insurance, while about 96% of homeowners have it. You may be thinking that as long as you have insurance on your rental properties that you'll be covered should a situation arise. While this may be true sometimes, it really is in your best interest for your tenants to have renter's insurance. Here are some possible situations that could arise where having renter's insurance will be a huge help to you as the landlord.
Theft
If a tenant's property is broken into and they don't have renter's insurance, they will be forced to pay for everything that was stolen or damaged. They may not have the money to pay for both replacement items and rent, so you may not get paid for a while. Or even worse, the tenant could choose to move out and leave the property vacant. In addition, if you didn't provide the security measures that you promised in the lease, the tenant could hold you responsible out of frustration for the situation, and your entire business and income will be severely disrupted.
Fire or Storm Damage
Thankfully, in the case of fire or storm damage, your landlord insurance policy should pay for any repairs that need to be made to the property, and you should be reimbursed for the missed income while repairs are being done. If your tenants have renter's insurance, they will be reimbursed for temporary living costs while they wait for their home to be fixed. If a tenant has renter's insurance, they are more likely to make only temporary arrangements during repairs, and they are more likely to move back into the property once it's fixed. However, if a tenant does not have insurance and cannot afford temporary living arrangements plus replacing damaged items, they are more likely to leave your property before the repairs are complete.
Liability
In the case of one tenant disputing with another due to an injury of some sort, you are likely to become involved in the situation. Renter's insurance provides tenants with personal liability so that legal expenses and possible damages will be covered. While a tenant-tenant dispute may not directly affect you if you avoid involvement, your name or business could become associated with the issue which could hurt your reputation and income.
There are enough possible issues that could arise between landlords and tenants without the added stress of insurance problems. Save yourself the hassle, the stress, and money by simply requiring your tenants to purchase renter's insurance before they even sign a lease. It is truly in their best interest as well as your own, and if you ensure that all of your tenants are covered by insurance, you will breathe more easily should any of the above issues arise.