Should I require my tenants to carry renters insurance?

Landlord insurance will cover your liability and protect against damage to the building but it will not cover any of the tenant’s personal property. For this reason alone it is in the best interest of the tenant to have renters insurance so they know their stuff is protected. It will also free up any confusion if the renter assumed your homeowners insurance would cover their belongings.

Another important coverage that renters insurance provides is personal liability coverage which will cover property damages that the tenant may cause and usually starts at $100,000. This will give you the peace of mind that if they start a fire it will be covered on their policy and not yours. This will save you a claim made and deductible to repair damages they cause.

Five Reasons Why Landlords Should Require Renters Insurance

  1. Provides coverage for tenant’s personal property so they assume it is covered by your landlord insurance policy.
  2. Renters will have personal liability coverage in the event they cause damage to your property it may be covered on their policy. This will reduce any claims you make against your policy and in the long run reduce your insurance premiums.
  3. Loss of use coverage will protect a renter in the event the unit becomes unlivable from a covered loss. Examples include fire damage or water damage that the renter must move out while repairs are completed.
  4. Policy is transferable to other addresses if the tenant moves. You will be offering a service by providing ways to get cheap insurance coverage.
  5. Shows your tenant is financially responsible and thus more likely to be a good tenant long term.

How can a landlord know a tenant has renters insurance?

The easiest way to ensure your tenant has the required insurance including the proper liability coverage would be to have them submit a copy of the policy each year. The policy declaration page will show coverage limits for important items like liability and personal property.

You can also ask to be listed as an additional insured on the renter policy so the insurance company notifies you of changes to the policy (if available). Some insurance companies make this easy to add and can even setup email notifications for changes to the policy that can impact the other parties.

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