Wednesday, September 28, 2022

Should Landlords Require Renters Insurance

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Do Landlords Need Insurance Too

Should A Landlord Require Tenant Insurance?

Yes, landlords need insurance, too! Landlords insurance is an insurance policy that helps protect landlords from liability claims and damages to their property.

A policy like this usually has sections related to:

  • Premise liability
  • Rental property
  • Loss of use coverage

Where a landlord insurance policy may come into play is in the area of certain natural disasters and unintentional situations that make the home uninhabitable. For example, if unexpected events occur to the physical structure of the rental, like the empty basement floods and the tenant has to move out for a few days while you deal with it, your insurance policy may designate your tenant’s hotel stay as a covered event. Your policy may also compensate you for the rent you can’t collect while your tenant can’t stay in the home.

Protect You And Your Property With Renters Insurance

Renters insurance provides a number of great benefits to landlords that you may not have realized.

Plus, the combination of benefits and low price your tenants can take advantage of means they have very little to lose in getting it and much to gain.

So, use the points we talked about above to make your renters insurance policy compelling and enticing.

As a result, youâll be covering yourself in a myriad of ways that your liability policy either may not or does not cover you and your property.

Focus On The Benefits

To some this might sound obvious, but if youâre not doing it youâre missing out on the biggest selling point by far.

Clearly display the benefits, in bullet point style, on a flier, a banner, a landing page, or simply in conversation.

Make it simple enough to clearly understand the value without droning on about it.

Focus on language that makes it clear that youâre talking about the value it has to them, not to you or anyone else.

Theyâre going to be thinking about it from the perspective of, âwhat is in it for me?â so make sure to give that to them sooner than later and make it compelling using what we talked about above.

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Renters Insurance Is Good For Renters

Before considering the tangential benefits that renters insurance offers landlords, the protections that tenants receive are critical. Most renters policies provide tenants with at least three paramount protections:

  • Personal Liability Coverage: May help pay legal fees and settlements associated with certain liability lawsuits that could be filed against a tenant
  • Personal Property Coverage: May help pay for the restoration or replacement of damaged and stolen belongings, such as furniture, electronics, books, etc.
  • Additional Living Expenses Coverage: May help pay for other lodging if the leased residence is rendered unlivable by a covered disaster

Requiring renters to carry at least some of these protections isn’t only in your interest as a landlord but also for renters’ benefit.

What Does Renters Insurance Not Cover

Should You Require Renters Insurance at Your Rental Property?

Earthquakes and floods are not covered by standard renters insurance. You would need separate flood insurance and earthquake insurance policies for those disasters.

Renters insurance also doesnt typically cover:

  • Mold
  • Damage from pets, pests or rodents
  • Your roommates property, unless they are listed on the policy, too
  • The physical structure of your home

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Why Would My Landlord Require Renters Insurance

Just because youre moving to a new city doesnt mean youre ready to buy a house. Luckily, there are many benefits to renting. Youll have more flexibility, and you wont have to pay as much money upfront as you would if you were taking on a mortgage.

Even if youre just renting, theres a good chance that youre keeping a lot of valuable items in your rented home or apartment. Thats why its important to consider signing up for renters insurance. In fact, some landlords require tenants to have it.

Some landlords may request that they be named as an additional insured along with the property manager. And a tenant could be asked at any time to provide proof that they bought and maintain renters insurance.

If your existing lease doesnt require renters insurance, you dont have to carry it. But pay attention when its up for renewal. Your landlord can always include the requirement in your new lease or lease extension. More and more landlords have started to require their tenants to carry renters insurance.

Reasons Why Landlords Should Require Renters Insurance

According to Forbes, many tenants dont think they need renters insurance. Either they underestimate the value of their possessions or are under the misconception that their landlord is responsible for their belongings and dont think they need it. Requiring a tenant to have renters insurance can protect them should their property become damaged or stolen. Replacing even a minimal amount of lost property can cost thousands of dollars, and the last thing you want is for your tenants to have an added and unexpected expense.

If youre on the fence about making renters insurance required for your tenants, read on for the top benefits of renters insurance for both landlords and renters.

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Should You Require Your Renters To Have Insurance

Renters insurance can protect both landlords and tenants in a Dallas rental property. If youre a landlord or an investor who rents a property out to tenants, its a good idea to require that they obtain renters insurance and show you proof of their policy. While renters insurance isnt required legally in Texas, it can be required by landlords as a term of the lease agreement thats signed with tenants.

There are a few important reasons that requiring renters insurance is a good idea.

Additional Living Expenses Coverage

Why Do Your Renters Need Renters Insurance? | Square One

If your apartment building is damaged by a covered incident and temporarily uninhabitable, additional living expenses coverage may help pay for temporary costs like hotel bills.

Keep in mind that these coverages will likely have limits, the maximum amount of money an insurer will pay for a covered loss, as defined in your policy. You’ll also need to. This is the amount you agree to pay before your coverage kicks in to pay for a claim. choose a deductible. This is the amount you agree to pay before your coverage kicks in to pay for a claim.

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Loss Of Use Protection

If something were to happen to your building, like a fire or storm damage, and you have to find temporary living arrangements, your landlord wont foot the bill. Under a covered loss, your renters policy can cover:

  • The replacement of destroyed personal property
  • Additional living expenses, like a hotel
  • Other qualifying expenses while youre temporarily displaced

Frequent Misconceptions About Renters Insurance

There are a number of common misconceptions about renters insurance that might keep tenants from purchasing a policy. Weve listed and dispelled some of those below.

Misconception: My landlord insures my personal property

Despite what many renters think, their landlord or management company does not insure them or their personal property. Generally, a landlords insurance only covers the building or unit you live in. Renters are solely responsible for insuring their personal property, liability and expenses related to loss of use.

Misconception: My possessions aren’t valuable enough to warrant renters insurance property coverage

Failing to purchase a renters insurance policy because you dont own many valuables is a mistake for two reasons: Almost everyones personal belongings are worth more than the estimate, and it disregards the value provided by liability and loss of use coverage. The average value of possessions is approximately $30,000 for a standard two-room apartment, according to Allstate. When you calculate the value of your belongings, you may be surprised at how much it’s actually worth. However, even if a renter has no personal property, the other coverage features make renters insurance worthwhile.

Misconception: I don’t need liability coverage

Misconception: Renters insurance is expensive

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Should I Require My Tenants To Carry Renters Insurance

Landlord insurance will cover your liability and protect against damage to the building but it will not cover any of the tenantâs personal property. For this reason alone it is in the best interest of the tenant to have renters insurance so they know their stuff is protected. It will also free up any confusion if the renter assumed your homeowners insurance would cover their belongings.

Another important coverage that renters insurance provides is personal liability coverage which will cover property damages that the tenant may cause and usually starts at $100,000. This will give you the peace of mind that if they start a fire it will be covered on their policy and not yours. This will save you a claim made and deductible to repair damages they cause.

Can Landlords Require Renters Insurance

Should You Require Renters Insurance as a Landlord?

Learn why you should and can require renters insurance and how to address the topic with your tenants.

    Landlords can require tenants to carry renters insurance as long as it is specified in the lease and required of all tenants who live in the rental property. Renters insurance is not required by law, but a tenant with coverage can benefit both the landlord and the renter.

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    Do You Need Renters Insurance

    If you could not afford to replace all your belongings if they were destroyed in a disaster like a tornado, you need renters insurance. If youve accumulated possessions, think about whether losing them all would be a financial disaster.

    Here are questions to consider when deciding if you need renters insurance.

    How Can A Landlord Know A Tenant Has Renters Insurance

    The easiest way to ensure your tenant has the required insurance including the proper liability coverage would be to have them submit a copy of the policy each year. The policy declaration page will show coverage limits for important items like liability and personal property.

    You can also ask to be listed as an additional insured on the renter policy so the insurance company notifies you of changes to the policy . Some insurance companies make this easy to add and can even setup email notifications for changes to the policy that can impact the other parties.

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    Typical Costs Of Renters Insurance

    According to a recent article on ValuePenguin, the average cost of renters insurance is about $19 per month for personal property coverage up to $25,000 and personal liability coverage up to $100,000. Deductibles average between $500 and $1,000.

    The article also notes that the cost of renters insurance can vary significantly from state to state.

    The most expensive states for renters insurance are Louisiana, Michigan, and Arkansas, where monthly premiums for renters insurance average between $37 and $30. By comparison, the most affordable states for renters insurance in the U.S. are New Hampshire, Utah, and Wyoming, where the average cost of renters insurance is $12 per month.

    Both ValuePenguin and Insurance.com provide ways to search for the cost of renters insurance by city and state, and offer quotes for a renters insurance policy online.

    It Protects Their Personal Property

    Why is renters insurance required and what companies should you go with

    Just about any argument you make in favor of renters insurance to a prospective tenant is that it protects their personal property. The insurance company issues the replacement cost should something happen. Everyone understands money, and nobody wants to buy something twice. This is a strong argument.

    What’s also important to show is what renters insurance protects your property from. This includes solid coverage against damage from:

    • Theft or vandalism
    • Extreme weather like lightning and hail
    • Frozen plumbing
    • Vehicle impact

    Also, don’t forget to mention the liability coverage should someone get hurt while in the home. As the tenant, this accident is their responsibility to cover. And, they won’t want to get caught paying someone else’s medical expenses.

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    Can My Landlord Require Renters Insurance

    Can a landlord require you to have renters insurance? Should you have it regardless?

    Yes, landlords can require renters insurance as a condition of leases in most states . And they can ask tenants to have a minimum amount of insurance coverage. Its a contractual issue, and what a landlord says usually goes.

    How Much Renters Insurance Should A Landlord Require In 2022

    For many landlords, requiring a tenant to obtain renters insurance is a standard business practice. Tenants can and will have accidents in a rental property, and renters insurance can help protect a landlord against claims made by a tenant or their guests.

    In this article, well explain what renters insurance covers, the difference between landlord and renters insurance, and how much renters insurance some landlords require.

    Key Takeaways

    • Renters insurance is purchased by tenants to provide coverage for personal property, liability, and additional living expenses.
    • In most states, a landlord can require a tenant to purchase renters insurance.
    • Average cost of an annual renters insurance policy is less than $20 per month.
    • Tenant renters insurance may also help to protect a landlord from liability claims arising from a tenants guest or injuries or damage caused by a tenants pet.

    Renters insurance is a policy that protects tenants.

    Sometimes also referred to as tenant insurance, renters insurance generally provides three types of coverage:

    Personal Property

    Renters insurance covers personal property like clothing, electronics, furniture, and other personal property belonging to the tenant that is damaged or stolen, up to the coverage limit of the renters insurance policy.

    Liability

    Additional Living Expenses

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    Which Type Is Right For You

    There are two standard renters insurance policies:

    • The Broad Form covers personal belongings against specific events, such as fire or theft. This is the most commonly purchased renter’s policy. Typical coverage under this form includes damage from fire, lightning, explosion, smoke, vandalism, theft and water-related damage from property utilities. This is the most commonly purchased renters policy.
    • The Comprehensive Form provides coverage for a range of events, unless specifically excluded by the policy. Considering the potential amount of coverage, the premiums for this policy may be higher. Location also may be considered when choosing your form. If you live in an area prone to violent storms, such as hurricanes, consider purchasing a comprehensive policy that specifically addresses storm damage.

    How Tenants Benefit From Renters Insurance

    Why Landlords Should Require Tenants to Carry Renters Insurance

    If you require your tenant to take out renters insurance, theirfirst question might be why you dont already have it. All legitimate landlordstake out a Rental Dwelling Policy. However, the tenant may not realize that thelandlords insurance covers the buildings structure and the damage caused. Itwont cover damage to the tenants personal property.

    If there was a fire in the property, and neither the landlordnor the tenant was to blame, The landlords insurance would cover the damage tothings like the walls, electricals, and structurebut none of the tenantspossessions. However, renters insurance would cover the damage to everythingthe tenants own up to the policys limit.

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    What Can A Landlord Do If A Renter Fails To Obtain Or Maintain Renters Insurance

    If you require renters insurance in the lease, the tenant may be in violation of the lease if they do not maintain coverage. Landlords generally require tenants to show proof of coverage annually by submitting the insurance declaration document that insurers provide.

    When a tenant fails to maintain coverage, a landlords options vary based on local law and the lease. A first step might be to ask your tenant to provide proof of coverage. In multifamily buildings, it can be helpful to remind the tenants who let their coverage lapse that this obligation not only protects themselves, but also provides protection for their fellow roommates or neighbors. It may be that your tenant simply forgot to renew or accidentally missed a payment. Often, insurers will allow retroactive coverage in these situations if the gap in coverage was not too long.

    If a tenant fails to provide proof of coverage, a landlord may need to show the tenant they are serious about this requirement. This may require sending a notice to cure or quit, or an Eviction Notice, which instructs the tenant to fix the lease violation by obtaining the required insurance or move out. This notice is often the first step before moving forward with an eviction.

    If the notice does not work, you may need to get creative or begin the eviction proceedings. Where allowed by law, some landlords may consider it so serious a violation that renters will not even be given more than a few days to fix the violation.

    How Do I Require Renters Insurance Through Azibo

    When you add a tenant to a property and add a lease, there will be a toggle at the bottom where you can require renters insurance.

    After youve required renters insurance as part of an existing or new lease, your tenant should see a prompt on their dashboard.

    Renters will then have the option to either purchase a policy via Azibo or enter an existing policy manually.

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    Pays Temporary Tenant Expenses If Disaster Strikes

    Unfortunately, accidents such as fires or other natural disasters can happen at any time. If an apartment building were to be damaged in a disaster and deemed uninhabitable, many landlords feel responsible to help their tenants secure a temporary home. In fact, it may even be required based on local laws. For landlords of multiple apartment or condos within the same building, this expense could quickly add up.

    Requiring renters to carry a renters insurance policy greatly reduces the likelihood of a landlord having to pay for relocation expenses if something happens to their building. On the unlucky chance that a building becomes unlivable, renters insurance usually pays for some of the tenant’s additional living expenses. This might include hotel stays or relocation costs.

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