The roof leaks and damages some expensive furniture; The tenant slips and falls in the hallway; Someone gets bit by a dog.
All these scenarios can and do happen.
Renters insurance is very underutilized but it is also one of the most affordable things that can protect the tenant and the rental property.
- 1. Renter's Insurance is Cheap
- 2. Tenant's Belongings are Covered
- 3. Tenant's Liability is Covered
- 4. The Landlord is Protected With a Renter's Policy
1. Renter’s Insurance is Cheap
Renters insurance prices vary but often are between $12 and $18 per month. Prices vary by location and also vary based upon
- The type of coverage (liability, contents, pet coverage etc)
- How much coverage you need
So, price is never really an issue for a tenant, unless you are renting to an extremely poor category of people. Even in that case, they likely have section 8 and can still afford the $20/month.
What Affects the Price of Renters Insurance Coverage
Almost anything can be covered with a renters policy. The more expensive things that are covered, the more it will cost.
There is additional renters coverage you can get for a dog or other animal. This will protect both the renter and the landlord in case the animal causes damage or bites someone. Adding this to the policy and also the type of animal can affect the price
Typically renter’s insurance policy deductibles range from $500 to $2000. The higher the deductible then the lower the premium price will be.
2. Tenant’s Belongings are Covered
This one is obvious – You want to insure your (or your tenants) personal belongings from damage and theft.
You may not feel like you have much worth insuring, but if you don’t have enough money to purchase all your electronics, furniture, and jewelry in the case of theft or fire, then you probably want insurance.
As a landlord, you want to make sure the tenant’s belongings are protected. If the roof leaks and their things are damaged, who do you think they are coming after?
So, mandate the insurance in your rentals.
What Renter’s Belongings are Covered with a Renter’s Policy?
Just about anything can be covered under your insurance policy as a renter. People can insure their heirlooms, jewelry, firearms, and more.
Your insurance agent will specifically ask you if you want certain things covered and how much to cover, such as a wedding ring and exactly how much to cover it for. If you have a question about any coverage, don’t forget to ask.
You can cover everything from wedding rings to firearms, computers to televisions. So, make sure it’s all covered.
3. Tenant’s Liability is Covered
It’s true that the landlord will have liability insurance on the property. Should something happen, the people on the property will be covered. This may not protect you if it is your negligence that causes the problem.
People often think that only dog owners should get liability insurance, but I can think of a lot of examples where your negligence might hurt someone. Let’s say you come home late at night and accidentally leave a bag of trash, a box, or a bicycle in the stairwell because you are too tired to move it.
The next morning your neighbor trips over your junk and falls down the stairs. The owner’s policy will cover the landlord, but you might also be sued for your negligence!
4. The Landlord is Protected With a Renter’s Policy
The landlord should require every tenant to have Renter’s Insurance. If something happens to the tenant’s belongings, they often find a way to blame the landlord, even if it’s not the landlord’s fault. Even if they are wrong, they can cause a lot of headaches for the landlord to deal with. Avoid it all simply by requiring content insurance for the renter and liability coverage.
Liability insurance is important, but especially for pet owners. Pass the liability issues to the tenant by requiring them to carry a pet liability policy. When Their dog bites someone, their coverage will kick in first, and the landlord’s insurance policy will kick in second.
Sometimes tenants cause damage as well and renter’s insurance may be there to pay for the repairs. You can find more information about dealing with property damage caused by tenants.
Will Renter’s Insurance Create Vacancies?
Tenant’s may gripe about paying the insurance, but most will pay it. Those who refuse to pay it are probably not ideal tenants anyhow and may cause other problems down the road. Remember, it’s better to have a vacancy than to have a bad tenant.
Can the Landlord Require Me to Get Renter’s Insurance?
As long as there is no law or ordinance in your specific area, it is completely legal to require a renter’s insurance policy and highly recommended. A landlord cannot, however, require it in the middle of a lease if it wasn’t written into the agreement in the first place. In this circumstance, the landlord can request that the renter get insurance prior to renewing the lease.
Reasons to Not Have a Renter’s Policy
Renter’s Insurance is amazingly cheap, covers all of the tenant’s belongings, and has additional coverage that protects both the renter and the landlord. $15 or $20 is such a small amount for all the benefits it provides. The only reason someone would have to NOT get a renter’s insurance policy is that:
- They’re too lazy to call an agent.
- They can’t afford (or they are too cheap to get) a policy.
As you can see, there really are no good reasons to avoid buying a policy.