As a Landlord, Should I Make My Tenants Get Renters Insurance?

YES! As a landlord you should definitely encourage your tenants to buy renters insurance. With this article we’ll delve into the “whys” and “hows” of making your tenants get renters insurance.

Why Should Tenants Buy Renters Insurance?

In a nutshell, a renters insurance policy is designed to protect your tenant’s belongings. Usually these are named peril policies. In other words, they will usually pay for your tenant’s loss in cases of:

• Fire
• Smoke damage
• Theft
• Sump backup or sewer overflow
• And similar situations

Occasionally, renters insurance policies may offer coverage for Flood and Earthquake losses. Know that these policies are few and far between though, as a rule you’ll need to get a different type of policy for flood and earthquakes.

Does Renters Insurance Protect a Landlord?

It sure can! Imagine you have a duplex, both sides rented out. Both families have access to 50% of the basement area. One tenant has finished theirs and treats it like a rec room with an expensive pool table, video games, computers and so on. The other tenant simply uses the basement for storage. Their half of the basement is full of boxes, holiday decorations and so on.

Now imagine that the city’s sewer systems freeze and back up. This is followed by a massive snow thaw. Your sump pump is overwhelmed, and you end up with two feet of water in the basement at the duplex. Both tenants will be looking at a loss. Consider this chain of events:

• Will tenants attempt to sue you? Probably, if their losses are expensive or meaningful.
• Will the lawsuit hold up in court? Possibly. If your sump pump is out of date, or you don’t have proof of maintenance you might be held liable.
• Does your landlord protector’s policy cover your liability? Yes, it will.
• Will this liability claim affect your insurance premiums? Absolutely.
• Can an insurer non-renew you after a liability claim? Absolutely. They will be required to finish their yearly contract, but your insurer has the option of either raising your rates or non-renewing your policy.
• Will it be difficult to get a new landlord’s protector policy elsewhere? Probably. Claims history has a huge effect on other insurance companies willingness to insure you.

But all of this could have been avoided if your tenants had renters insurance! If they did, they could have called in a claim, sent some photos via their cell phone to an adjuster, and received a check for their goods.

How Can I Make Tenants Buy Renters Insurance?

Now that you really understand the benefits of renters insurance, you’re probably eager to get your tenants on board. But few people are looking forward to paying another insurance bill. How can you get tenants to buy it?

• Put it in your lease as a requirement. All new tenants must carry renters insurance and prove to you, yearly, that they have it.
• Increase your future rents by $50 per month, and offer a $50 discount to tenants who carry renters insurance.
• Encourage them with a note in the mail. Let them know you’ve found quality, affordable renters insurance information and would like to share it with them.
• Meet with your tenants in person, and ask them to talk to your insurance agent.

Know that renters insurance is generally really affordable! If you offer a $50 discount for carrying $25 in insurance, more tenants will be likely to purchase the coverage. They’ll be saving $25 per month and have coverage for their belongings.

We’ll Help You Find Renters Insurance and Landlord Protector Policies

At InsureYourCompany.com we can help you find the landlord protectors policies, lessors risk policies and renters insurance you need. Contact us to learn more about landlords insurance and renters policies today!