February 4, 2021
Why Do Landlords Require Renters Insurance?
Granted, renters’ insurance helps cover tenants’ valuables and belongings, but you’re probably wondering why it is super important for lease renewal or perhaps, a new lease. Well, you’re probably wondering this because you believe renters’ insurance only protects renters from losses.
In reality, renter’s insurance has many unseen benefits for both tenants and their landlords. Surprised? Keep scrolling because this is exactly what we mean to discuss in this post.
What Is Renters’ Insurance?
Renters’ insurance is an insurance package that intends to protect tenants living in a rental property. It protects them from unforeseen events; all of which may also be referred to as ‘unexpected costs’.
We don’t live in a perfect world, which is why it is imperative that we think ahead and prepare for certain situations such as visitors’ injuries, break-ins, theft and so much more. Of course, you’re going to come across a lot less layman terms in your contract and instead you’ll see something along the lines of:
1. Personal Property Insurance
This covers the costs to replace or repair personal belongings including electronics, furniture, clothing and whatever else renters’ choose to add in your policy.
This helps pay for medical bills if a tenant is found responsible for someone else’s injuries or when they accidentally damage another tenants’ or neighbors’ property.
3. Additional Living Expenses
If a renters’ unit needs to be vacated, this helps cover for their additional living expenses such as hotel/motel bills.
At this point, it should seem very clear why renters’ insurance is so important for tenants, but is that the only reason why landlords are so adamant on enforcing it? Let’s find out:
What’s In It For Landlords?
The biggest advantage for landlords is that renters’ insurance helps them steer clear of unforeseen tenant problems in the future. Speaking of which, isn’t this also the reason why most landlords have a very strict screening process for potential renters?
Coming back to renters’ insurance, landlords who strictly shortlist candidates without renters’ insurance do so because most renters would simply flee when they aren’t insured. As a result, you will find yourself starting at a bill you had nothing to do with in the first place. In addition, some repairs also take up to weeks, or even months to repair.
Apart from unforeseen damages, the following are just a few examples of how renters’ insurance can help:
Discerning Responsible Tenants From the Rest
Most landlords prefer to screen their tenants by running background checks and looking up credit reports. On the other hand, tenants prove that they are more committed to their responsibilities and are dependable by getting themselves insured.
Coverage For Damages Caused By Pets
Do you love animals? If so, it would probably hurt to put up a sign that says, “No pets”. However, with renters’ insurance you get to attract pet-friendly tenants. Of course, you will also feel at ease that your tenants’ insurance policies cover all liabilities caused by their pets.
Lower Insurance Premiums
By insisting on your potential tenants to buy renters’ insurance, you’ll be liable to pay lower premiums. For instance, if you file claims for injuries caused by tenants or property damage, your premiums will automatically increase. However, when your tenants accept part of the blame, they will also accept a significant part of the claim, therefore, lowering your premiums.
Despite everything you have learned here, as a landlord, you have every right to request your tenants to purchase renters’ insurance. As stated by the Insurance Information Institute landlords can ask tenants to do so for new or the renewal of lease contracts.
If all of these technicalities are too much for you to handle, you can always delegate these responsibilities to property managers. In doing so, landlords can not only speed up tenant screening but also leave no room for expensive and time-consuming surprises in the future.