Next to collecting rent, protecting your investment is one of the most important things you can do as a landlord. Requiring renters insurance is a step that not many DIY landlords take, but is one that may prove to be the protection that your property needs.
Even if you do your best to ensure that your renters are always qualified, and even if you constantly maintain your property in top shape, without proper insurance you leave yourself exposed to liability due to unforeseen events.
Aside from standard liability and property insurance that every landlord should have, renters insurance has many landlord benefits, despite being a product designed for renters.
In this article, we will review the landlord benefits that are embedded in most policies and explain why you should consider requiring renters insurance from all of your renters.
Renters Insurance – Tenant Benefits
Renters insurance is designed to protect tenants and is similar to homeowner’s insurance in many ways.
Here are some of the scenarios that a typical policy will cover (keeping in mind that the exact coverage range and limits will vary depending on the specific policy):
- Damage to personal belongings – the cost to replace your tenants’ personal belongings that are damaged by fire, smoke, water, wind, lightning, theft, or vandalism
- Temporary living expenses – if your property becomes uninhabitable due to disaster, your tenants’ temporary living expenses for a hotel or another rental will be covered
- Medical expenses – if your tenants or their guests get injured on your property, medical expenses will be covered
- Accidents and injuries outside of the home – liability insurance that covers injury or property damage caused by your tenants or their family members outside of your property
- Legal costs – covers your tenants’ legal expenses in case they get sued by someone injured at your property
- Pet accidents – covers expenses caused by your tenants’ pets either in or outside of your property, if their dog bites someone, for example
- Items borrowed or rented – items considered “in your tenants’ possession” would be covered, even if they do not own them
- Belongings away from home – if someone steals your tenants’ items from their car or hotel room, the cost to replace would be covered
Not only does renters insurance provide your tenants with excellent coverage for a wide range of scenarios, but it is also very affordable, with a national average policy premium of $125-$150 per year.
Why Every Landlord Should Require Renters Insurance
Aside from the coverage benefits and affordability for tenants, there are several benefits that landlords can enjoy when their renters are protected.
The benefits of renters insurance for landlords include:
- Reduces landlord responsibility – in case of a disaster, you may feel obligated or you might be required by state law to help your renters find a suitable temporary living arrangement and potentially cover the cost. Since renters insurance covers your renters’ expenses relating to temporary housing in case of an emergency, you won’t need to worry about covering the expense as a landlord and can focus on repairing your property.
- Covers homeowner’s insurance deductible – most policies will cover the deductible of a homeowner’s insurance policy. This means that if your renters cause damage to your property that forces you to file a claim on your homeowner’s insurance, their policy will cover your out-of-pocket deductible.
- Limits legal exposure – any injury or damage caused to your tenants or their guests in your property might come back to bite you. Filing a claim against you or your insurance will result in potential expenses and increased premiums. Having renters insurance will allow your tenants to get reimbursed for expenses without getting you involved.
- Additional renter screening step – as we’ve discussed, renters insurance is quite affordable. If you require it in your rental lease agreement and get push back from your potential renters, this could be a red flag that might point to a bigger issue of not being able to cover the rent. Your renters should be able to easily cover the monthly rent expense, so paying $125-$150 a year for a renters insurance policy shouldn’t break the bank.
- Overall peace of mind – all of these benefits combined will remove much of the stress associated with ensuring your property is protected, and give any landlord greater peace of mind.
So renters insurance is comprehensive, affordable, and provides meaningful protection to landlords, which is why we believe it is a no-brainer that every landlord should require it.
Make Sure you Are Added as “Additional Interest”, not “Additional Insured”
Being named as an “additional interest” on the policy will keep you informed of the policy status and provide you the assurance that the policy has indeed been purchased. Doing so will also notify you of any changes or cancellations.
One important thing to keep in mind – “additional interest” is often confused with “additional insured”, and the distinction is an important one for landlords especially.
Being named as “additional insured” technically means that you would be covered under the renters insurance policy alongside your tenant. Doing so will prevent both of you from being able to make claims against each other’s liability insurance in the event the need should asrise, defeating the purpose of property and renters insurance.
So definitely ask to be named as “additional interest” on the policy to stay informed, and make sure you are not named “additional insured” so that you stay separated from your renters’ policy.
Zuby Lets You Require Renters Insurance
This will trigger the option for your renters to either purchase it directly on the Zuby app or provide proof of a policy purchased elsewhere.
Since you and your renters can both upload documents to the property, it will be easy for you to verify that an acceptable policy is indeed in place.
So check out our app, and make sure to require that all of your tenants purchase renters insurance going forward!