Lease Basics: Renter’s Insurance

Posted by Teresa on June 14, 2011 under Lease and Rental Agreements | Be the First to Comment

If you do not require your tenants to hold renter’s insurance policies, you may want to reconsider your policy. Renter’s insurance is a nice layer of protection for landlords. It covers losses or injuries suffered due to tenant’s negligence—for example, if they start a fire or flood the building by leaving a faucet on overnight.

Renter’s insurance also covers injuries suffered by a visitor to your rental property due to a tenant’s negligence, too. So the visitor who trips over the tenant’s dog and breaks a wrist can collect from your tenant’s insurance company, rather than yours.

Renter’s insurance can also protect the tenant’s belongings in case of fire or theft. While your property insurance covers the building after a fire, tenants could be at a complete loss without insurance. Renter’s insurance helps them find temporary lodging and replace their clothing, furniture and other household goods.

Since renter’s insurance is relatively inexpensive—only $15-$20 per month, on average—a renter’s insurance requirement automatically screens out potential tenants who have financial difficulties and cannot afford it.

If you agree that requiring renter’s insurance of all tenants is a good idea, add a clause to your lease agreement that states the following:

• The tenant acknowledges that the landlord’s insurance does not cover the tenant’s possessions.
• That the landlord’s insurance does not prevent tenant liability due to the tenant’s actions or negligence.
• In case of fire, flood, theft and other acts of nature, the landlord is not responsible for the tenant’s losses.
• Therefore it is required that the tenant retains renter’s insurance coverage.
• Allowing the policy to lapse may subject the tenant to responsibility for losses suffered by others due to the tenant’s or their guests’ actions.

Have your attorney provide you with an actual, legally binding provision, of course. Requiring renter’s insurance is an easy way to help landlords sleep a little better at night!

Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.