Hi, this is Tanya with Envy Property Management. In last week’s video, we talked about the difference between Renter’s Insurance and Tenant Liability Insurance. Today we are going to dive into the benefits of renters insurance and why landlords should ALWAYS require their tenants to carry a renter’s insurance policy.
Many tenants may believe renters insurance is just an added expense they can do without. In fact, if a landlord doesn’t require it tenants will likely not take out a policy at all. Some tenants may even believe the landlord’s insurance will cover their personal belongings if something were to happen. But similar to most insurance policies, it's only "an unnecessary expense" until the unexpected happens, and you need to file a claim.
What Does Renters Insurance Cover?
As with any insurance, coverage depends on the policy taken out and the terms and conditions. Generally, renters insurance covers the following:
- Damages to personal property
- Liability for injuries
- Losses caused by theft
- Natural disasters
- Relocation expenses if the rental unit is uninhabitable
- Repairs if you accidentally damage someone else’s property
- A guest’s medical bills if you’re found responsible for their injuries
How Do Tenants Benefit from Renters Insurance?
A common question tenants may ask If you require them to take out a renters insurance policy is, don’t you as the landlord already have insurance? Of course, all legitimate landlords take out a Rental Dwelling Policy. However, the tenant may not realize that your insurance policy only covers the building’s structure and the damage caused. It won’t cover damage to the tenant’s personal property.
Let’s look at one example. Say there was a major storm that caused roof damage and subsequently a leak in the home. Neither the landlord nor the tenant was to blame but there is significant damage to walls, ceilings, baseboards, and some of the tenant’s personal furniture. Your insurance would cover the damage to the structure of the building—but none of the tenant’s personal possessions. However, if the tenant carries a renters insurance policy, it would cover the damage to everything the tenants own up to the policy’s limit.
Liability coverage is another reason why renters insurance is so crucial. Liability coverage protects tenants against people who claim to have been injured near or on the property. It can also protect the tenant from damage claims to other people’s property. This coverage may help protect the tenant from paying out of pocket for certain costs if they are found legally responsible for injuries to other people or damage to their property.
Tenants likely don't expect an accident to occur. But, if their child throws a ball through a neighbor's window or they’re held responsible for medical bills after a guest trips and falls in the rented home or apartment, liability coverage may help cover the costs.
How Do Landlords Benefit from Renters Insurance?
By requiring renters insurance, landlords potentially avoid liability claims from tenants due to damaged property caused by unforeseen circumstances. This also gives landlords peace of mind knowing they will not be held responsible for the tenant’s belongings in case their property becomes damaged.
Also, another great benefit for landlords, they can potentially lower their own insurance premiums when they insist tenants take out a renters insurance policy.
landlords do have the right to request that tenants purchase renters insurance. As a landlord, you can request renters insurance for new lease contracts or when renewing current lease contracts. The requirement for renter’s insurance should be part of the rental agreement. It is customary for tenants to provide proof of renters insurance within 14 days of the lease start date.
Thanks for watching today’s video on the benefits of renter’s insurance. My name is Tanya with Envy Property Management, make sure you subscribe to receive more valuable information about your investment properties. If you have any questions about property management or what we can do to help you increase your return on investment, please call us at 801-337-4337, or visit our website at envypm.com.
