Owner's Guide to Renter's Insurance

Robert C. White & Company • September 11, 2020

Renter's Insurance - A Must Have

Renter’s insurance is not often a priority for incoming tenants. We run into plenty of applicants who aren’t even aware that this type of coverage exists! With the recent effects of the pandemic and natural disasters always looming, it’s more important than ever to have tenants with their own renter’s insurance policy. The good thing is, renter’s insurance is beneficial to both parties in a lease agreement and comes at a fairly low cost to tenants. We think renter’s insurance is so important, that we require every tenant at Robert C. White & Company to carry a policy, keep reading to find out why!

What Does Renter’s Insurance Cover & How Does It Protect Tenants?

There are a few different coverage options available for renter’s insurance policies:

Personal Property Loss/Damages = The most typical renter’s insurance policy will cover the personal property of your tenants. If items are stolen or damaged inside of the property, insurance will cover the cost of replacement. Beyond theft, the policy would also insure items from fire, smoke, storms, leaks, and other conditions. Personal property that is commonly covered in these policies includes electronic devices, clothes, furniture, and minor appliances.

Liability = Renter’s insurance policies can also include liability for accidental damage a tenant does to your property during their lease period. In the event that a tenant does damage that amounts to greater than the security deposit, their renter’s insurance policy may cover those costs. Accidental fires and floods are more common than expected, which is why this piece is so important!

Loss-Of-Use = Tenants that are misplaced from your unit due to a natural disaster, fire, or flood would have loss-of-use coverage through their renter’s policy. This means that if they must vacate the unit for a period, the insurer would cover the cost of a hotel or other living arrangements.

If and when an emergency hits, your tenant will likely thank you for requiring them to carry a renter’s policy. We’ve all heard this... Hope for the best, but prepare for the worst!

How Does Renter’s Insurance Protect Landlords?

Even if a tenant’s personal property isn’t on the top of your list of importance, it could become a problem if the tenant decides to take legal action against you. Whether or not you’re held liable is one thing, but handling lawsuits is a hassle that ends up costing you time and money. Having renter’s carry an insurance policy ensures you’re not at risk if and when their things are damaged. A good renter’s insurance policy also puts your tenants in a better financial position in event of a loss. Because they won’t need to cover costs out of pocket, tenants will be more likely to continue paying rent or restart

payment in the event they are displaced for a time.

Should You Require Tenants Carry A Renter’s Insurance Policy?

Most simply, yes. You should require any new tenants to carry their own renter’s insurance policy. It gives both parties to the lease added peace of mind.

It is now standard practice for property managers and landlords to require this type of policy. When doing so, make sure you include terms in your lease that outline the requirement for renter’s insurance. Be transparent and detailed about the tenant requirements to purchase a policy for themselves. Just like a security deposit, you shouldn’t sign a lease with new tenants until they have provided you with proof of the insurance coverage.

This way, even if a tenant was to show you proof of coverage just to get the lease signed, and then cancels their policy after, you have a record of the interaction and document of it. You can then point to the lease violation if they take you to court, or have to go through an eviction.

Who Sells Renter’s Insurance?

Generally, renter’s insurance policies are very affordable and can be found through most major insurers. Geico, State Farm, Progressive, and other big firms offer competitive rates for comprehensive coverage. You shouldn’t require tenants to use a specific insurer or policy, but do ask that they carry liability coverage for property damage or injuries caused to other tenants. And remember, request a copy of any documents that prove an active renter’s insurance policy before signing the lease!

Final Thoughts

Renter’s insurance protects you and your tenants from loss, damage, and liability. Typically, these policies range anywhere from $5-$50/month, which also won’t hit your tenant’s pockets too hard! In times of emergency, accident, or natural disaster, a tenant’s renter’s insurance policy will cover costs and protect you and them from liability as well. Requiring it is best practice, so if new tenants have any concerns, simply run down the list of benefits and explain why it is so important!

Questions or comments about renter’s insurance? Do you require your tenants to carry an active policy? Tell us more in the comments below!

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