Hi, this is Tanya with Envy Property Management. Today’s video is going to be part 1 of our 3 part video series on the various forms of insurance in property management. Today’s topic will be the difference between renter’s insurance and tenant liability insurance. There is a lot of confusion around these 2 policies, many people may believe that renters insurance IS tenant liability insurance, however, this is not the case. Today I’m going to clear up the confusion surrounding these 2 types of insurances.
First off, I want to be clear that I am not an insurance agent, nor do I sell insurance. For more specific questions regarding insurance, I encourage you to contact your licensed insurance agent.
RENTER’S INSURANCE
Many tenants may believe that the landlord’s property insurance will cover their personal property if any damage occurs due to an accident. However, the landlord's insurance only covers the building’s structure and the damage caused. It won’t cover damage to the tenant’s personal property. This is where the renter’s insurance will kick in.
Renter’s insurance has numerous benefits for both tenants and landlords. As with any insurance, coverage depends on the policy taken out and the terms and conditions. Generally, renters insurance will cover things like damages to tenant’s personal property, liability for injuries, losses caused by theft, natural disasters, and relocation expenses if the rental unit is uninhabitable.
For example, say there was a fire in the property, and neither the landlord nor the tenant was to blame. The landlords insurance would cover the damage to things pertaining to the structure of the property—but none of the tenant’s personal possessions. However, renters insurance would cover the damage to everything the tenants own up to the policy’s limit.
Liability coverage is another great reason why renters insurance is so important. 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. For example, a tenant could unintentionally leave a faucet on and cause water damage to the property below. The liable tenant would file a claim to their insurance policy to pay for the damage they caused.
Another benefit found in some renters insurance policies is additional living expense coverage. This could help cover unexpected costs from staying in a hotel if the property is inhabitable because of the damage caused.
TENANT LIABILITY INSURANCE
Tenant liability insurance is yet another form of coverage offered to tenants. However, the difference between tenant liability insurance, as opposed to renters insurance, is, this policy will cover damage done to the landlord's property due to negligence from the tenant.
For example, just a few weeks ago in one of our rental properties a broken water pipe was found to be flooding the basement. It caused significant damage, including walls, baseboards, and the ceiling damage. When we went to determine the cause of the broken water pipe, it was discovered that the tenants had left the exterior water hose attached to the hose bib connected to the home. The water in the hose froze and subsequently caused the water pipe to freeze and ultimately break from the pressure.
The tenant is liable for the damage done to the property. However, because this tenant has tenant liability insurance coverage, we are able to file a claim through their policy to cover the damages done to the property due to the flood.
So to sum up, the main difference between renters insurance and tenant liability insurance is, renter’s insurance will cover the tenant’s personal property in case of a disaster. Tenant liabilty insurance will cover damages done to the landlords property that was directly caused by the tenants.
Thanks for watching today’s video on the difference between renter’s insurance and tenant liability 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.
