When Tenants Cancel Required Renter’s Insurance

By E-Renter Tenant Screening
Posted on June 28, 2010 under Landlord Tips | Be the First to Comment

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!