Why Landlords Should Require Renter's Insurance
Asking certain things of your tenants can be tricky. You don’t want to seem demanding and impractical and drive away potential customers, but you also want to protect yourself and your property. For many landlords, they wonder if requiring renter’s insurance is worth the effort. In this article, we will detail the various ways that renter’s insurance benefits both you and your tenants.
1. Helps Avoid Court-Related Conflicts
When your tenants don’t have renter’s insurance, you run a big risk of being asked to foot the bill if anything should happen during their time in your property. Many tenants assume that any damage or liability will be covered by the property insurance that you already have, but this usually isn’t the case. While your property insurance may cover things like structural damage, things like theft would not be covered in your policy.
If there is any misunderstanding on this issue, you may be asked to compensate for any loss or damages that have occurred to the tenant’s personal property. If this isn’t clearly laid out in your rental agreement, this could end up as a court issue. Taking things to court doesn’t go well for anyone as it is expensive and time-consuming. Even if your insurance company does agree to pay some of the cost, you are likely to see higher premiums in the future.
2. Gives Everyone Peace of Mind
While nobody really thinks something bad is going to happen to their things, having an extra layer of insurance can give everyone involved peace of mind that if something does happen, it won’t uproot their life or your life. It is difficult to plan for things like theft, vandalism, damage, and natural disasters. These things can happen at any time and not having insurance means running a big risk of getting caught in a bad situation.
As a renter, they will have more peace of mind that their items are protected and that they won’t be expected to foot a large bill if damage occurs. Additionally, if they are displaced from the apartment, the insurance company will usually pay for temporary housing so they won’t be left without a place to live.
As a landlord, you will have extra peace of mind that you won’t be hit with surprise legal charges and insurance claims. You will know that the details are clearly outlined in the contract that your tenant signed. Additionally, you will feel better knowing that your tenants’ things are protected.
3. Can Screen Out Questionable Applicants
Requiring renters to have renter’s insurance can also lead to some unexpected benefits. Renter’s insurance usually doesn’t carry a hefty price tag and most people wouldn’t balk too much at paying an extra $20-30 per month. If you have a prospective tenant that reacts badly to the thought of having to purchase renter’s insurance, it may be a sign that they aren’t going to be a good tenant. If an extra $20 is really setting them off, you may want to ask if this person has a consistent enough income to be paying their rent on time in the first place. After explaining a bit about why renter’s insurance is necessary, a responsible tenant should understand its importance.
4. Extra Layer of Protection for Special Circumstances
Renter’s insurance is especially helpful if your tenants or your property have special circumstances that raise their probability for trouble. For example, lots of renter’s insurance plans also cover pet damage to property. This may be very important to you if you are a pet-friendly complex or considering applicants with pets. Additionally, if your area is prone to natural disasters like fires, tornados, or hurricanes, insurance can be a big help. In other cases, your property may be nearby to areas with higher crime rates and a history of break-ins. In this situation, renter’s insurance will be essential in making sure your tenant and their property are safe and secure.
5. A Few Extra Tips
Make sure that requiring renter’s insurance is clearly outlined in the rental agreement. You’ll want to make sure it is at the signing of the initial lease for new tenants, or on an updated contract for existing ones. It would be a good idea to seek out advice from a legal professional to make sure your wording is accurate.
If you have many long-term tenants, you’ll also want to be checking that their renter’s insurance is up-to-date and not expired. You may want to require proof of up-to-date insurance at each contract renewal, or at select dates throughout the year.
Requiring renter’s insurance brings many positives like reducing the risk of court cases, giving peace of mind, screening out questionable applicants, and coverage for special circumstances. Whatever your renting situation is, hopefully, you will find the right solution for you.