Renters Insurance

Renters Insurance

Renters Insurance

Requiring renters insurance in your lease adds an extra layer of protection. In this litigious world, renters insurance is an important and valuable component of a successful property management business. While the benefits to your tenants is substantial, do not overlook the value renters insurance provides you. A good example of why renters insurance should always be required in your lease, theft, fire, storm and water damage. While your insurance policy may cover the repair of your rental property, it does not cover the personal property of your tenants. The reality is, many tenants simply assume that a landlord’s insurance policy covers their personal property. 

What Is Renters Insurance?

Renters insurance generally provides coverage for the tenant’s personal property and liability from accidental injuries to guests and property damage…

How Renters Insurance Benefits Landlords

The number one benefit to a landlord, is adding an extra layer of protection. Consequently, if your tenant’s property is damaged and they do not have renters insurance, there is a high probability your tenant will try claim some type of landlord responsibility. Take for example a scenario where a tenant’s guest is injured. Tenant throws a party, and the guest slips on a spilled drink in the kitchen. Tenant does not have renters insurance, and guest does not have health insurance. Injured person files a claim against landlord. Subsequently, even if your insurance company does pay the claim, higher premiums will surely follow. On the other hand, if the scenario occurred in a unit where your tenants did have a renters insurance policy, it is highly unlikely you would be effected.

How Renters Insurance Benefits Tenants

While it is safe to assume guests will be safe in your tenant’s home, accidents do happen. And, when they do, your tenant is on the hook for medical costs. Other things like fire and natural disasters inevitably result in damage to the rental property as well as all things inside your tenant’s home. Insurance coverage for your tenant’s personal property is one of many benefits renters insurance provides. Take for example a scenario where your tenant’s belongings were stolen as a result of a break-in that was no fault of yours. It is highly likely your tenant will need to replace the missing items. This is where renters insurance can make or break the landlord tenant relationship. Regardless of the loss, disputes over who has to cover costs are completely avoided by having a renters insurance policy in place

What Renters Insurance Covers:

  • According to The California Department of Insurance A California Renter’s Insurance Policy Typically Covers Loss Or Damaged Caused By:
    • Fire
    • Smoke
    • Theft
    • Vandalism
    • Windstorm or hail
    • Lighting
    • Explosion
    • Falling objects
    • Weight of snow, ice or sleet
    • Water (caused by plumbing failure, appliance failure, fire sprinklers or other accidental discharges of water)
    • Electrical surges

It Also Covers:

  • Injuries that others sustain while at tenant’s home (including medical expenses and any resulting lawsuits)
  • Damage your tenant causes to other people’s property (ex: they break a neighbor’s window while playing ball)
  • Housing costs
    • If your rental unit is damaged and your tenant needs to live elsewhere while it’s being repaired
    • It will cover additional living expenses
It is an easy way to transfer risk away from the owner…

Renters Insurance Typically Offers The Following Protections:

  • Personal Property Coverage
  • Liability Coverage.
  • Additional Living Expenses

Keep in mind that these coverages will likely have limits as defined in the policy….

Everyone Benefits

Most tenants do not understand that value of renters insurance until they have to make a claim. The good news is renters insurance is very affordable. Typically, renters insurance will cost about $15-$20 a month. Furthermore, almost all major insurance companies offer renters insurance. And, best of all, when added to other policies in most cases your tenant will receive a multi policy discount. In any event, whether or not you require your tenants to have renters insurance. Cover yourself by letting them know your insurance policy will not cover their belongings. 

Why Should You Require Renters Insurance

  • To mitigate the threat of a lawsuit
  • Reduce your responsbility
  • Weed out bad tenants
  • To cover your deductible
  • Reduce conflict
  • For peace of mind

How To Require Renters Insurance 

We strongly recommend that you add a clause to your lease that requires your tenants to obtain renters insurance. Moreover, you should also require proof of coverage (making sure you are added as an additional insured). Equally important is making sure the insurance policy remains active during the entire tenancy.

The writer of this article is not lawyer. Make sure to consult with a licensed local attorney to ensure you are complying with all applicable laws in regards to your unique situation.

enters Insurance

Lease or Rental Agreement Example

Landlords have the right to require all tenants to carry renters insurance, but the condition must be outlined in the lease agreement. For example, you can require tenants to provide proof of renters’ insurance as a condition of of their lease. You can also specify the minimum amount of coverage required. Equally important is ensuring that you as the legal owner of the property be named as an additional insured. Insurance is a contractual issue between you and your tenant. If you have an existing lease that doesn’t require it, then your tenants don’t have to carry it.

The Good News

When your tenant’s lease is up for renewal, you can require it as a term of their lease renewal.

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When In Doubt

Of the most strategic ways to ensure your lease agreements have a renters insurance clause is having a professional property management company manage your rentals. Whether you are interested in changing property managers, or simply looking to hire a property management company for the first time, Rancho Mesa Properties can help. We take care of all types of residential rental properties including homes, condos, multiplexes such as duplex and triplexes, and even small apartment buildings. Let us manage your rental properties, so you can enjoy your life!  Call us today at (858) 576-2176. We will save you time, money, and the stress that comes along with managing your own rentals.

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