Let’s be honest, for any landlord, one of the most daunting tasks is to rent out a property. From phone calls, dealing with a variety of applicants, tenant screening, frequent paperwork, etc. can make you feel like you’re fighting a never-ending battle.
As a landlord, if you want to make sure you and your tenants are protected, you should make insurance for your tenants compulsory in your rental agreement. It’s not just beneficial for your tenant, it will also protect you in the long run.
If you have this question in mind, you are not alone. When your tenants have their own insurance policy, it gives you peace of mind and extra protection. For instance, if something unfortunate happens, like fire damage at your rental property, the tenant’s insurance policy can cover the damages. It keeps the premium of your policy low by reducing the claims on your own insurance. Moreover, it prevents you from expensive legal fees and also saves your time. Apart from this, renters insurance also plays a vital role in keeping a healthy relationship with your tenants when a major loss or damage takes place.
Let’s use the example of fire damage again. If your tenant does not have renters insurance you could be stuck paying for the damages to their personal property. But renters insurance can cover the damages and pay for the insured’s temporary living expenses, allowing both of you to have peace of mind.
This saves you from any litigations as well. According to a survey by Joshua Tree Consulting, each year, landlords in large properties have eight ‘nuisance’ insurance claims filed against them by their tenants.
By making renters insurance mandatory, you are making a lot of things easier for you and your tenants. Here are some added benefits of insurance for your tenants.
One of the most common misunderstandings about renters' insurance is that it’s expensive. Talk about your tenants and tell them that the average cost of renters insurance is lower than they expected. Depending on an individual’s risk profile, policies can cost as little as $5 per month. Your tenants can choose from policies that fit their needs, pocket, and lifestyle.
Tenants need to know that they won’t be covered if their property is stolen, or from fire or water damage inside the rental unit. Insurance for the building, home or condo is separate from the renters insurance that is needed to protect the contents inside the unit.
There are many situations in life where personal liability coverage is needed. For example, if someone is injured due to a tenants' negligence on your property, like slipping and falling, the renter’s insurance can cover legal fees and pay for the damages. No one wants to think about worst-case scenarios, but liability coverage plays a crucial role when it comes to medial fees and legal bills. If your tenant causes damages to their apartment or even someone else, they can be in an expensive mess. If this happens, your tenant will be grateful you made them get tenant liability insurance.
There are many surprising benefits of a renters policy. If your tenant is living with family members or a spouse, they will automatically be covered in the renter's insurance policy of the tenant. When a tenant adds other people in the policy, he/she needs to make sure they understand the type of coverage they need. If your tenant is living with others, he/she will need to add a policy known as ‘Additional Insured.’ It’s important to note that roommates are not covered in a renters insurance policy. They need to get one on their own.
Depending on the lifestyle of your tenant, as a responsible landlord, you can recommend the kind of insurance for your tenant's need. In a few states, the landlord has to purchase renters insurance for the tenants. According to a Nationwide survey conducted by Satisfacts, nearly 85% of the landlords requiring insurance defined the impact as positive or neutral. Whereas 91% said the administrative burden has been manageable or easy. As a landlord, you can pay for your tenant’s policy and include that cost in their rent. However, if you are not making insurance mandatory in the rental agreement, make sure to explain to them what makes renters insurance a good idea.
Undoubtedly, there are several advantages of requiring insurance for your tenants. Encouraging your tenants to get their own insurance plan helps them save money and stress during unexpected accidents. Moreover, it protects you as the landlord from being caught in the middle of a liability battle or insurance claim.