While it is apparent how renters will benefit from renters insurance, it can be less obvious why it is beneficial to the landlord. The reality is landlords will also be provided with added security when their tenants purchase renters insurance. In fact, the benefits are so great many landlords are now requiring renters insurance if it is legal in their area. Renter’s insurance, which protects tenants from theft, loss of property, and other damage related incidents, will provide both renters and landlords with peace of mind during the lease.
How exactly will landlords benefit from tenants purchasing renters insurance? Read on to find out the top reasons of why landlords should require renters insurance:
Why Landlord’s Should Require Renter’s Insurance
If you have never required renter’s insurance before, you might only know the basics of what it does. For renters, it obviously protects their belongings and possessions from theft, damage, and more. At the same time, the benefits renters insurance provides for landlords is just as essential to mitigate stress, legal issues, and tenant conflicts:
1: Added Security for Both Landlords and Tenants
Renters insurance provides security for both landlords and tenants because, in case of accidents or disasters, landlords will not be responsible for their tenant’s lost property and renters will be able to recover some of what is lost through their insurance. This will reduce any liabilities that might occur as well as save you from financial and legal battles.
2: It Covers the Gap
As a landlord, you carry your own insurance to cover your rental properties and that insurance is there to protect your investment in case disaster strikes. However, you likely have a fairly high insurance deductible. This gap in your coverage is where renters insurance can come into play – renters will be able to contribute to major disasters that might take place on the property, such as a fire. The average renter does not have the funds without insurance to handle catastrophes.
3: Reduces Legal Issues
If something happens on your rental property where damage occurs to a renter’s belongings, if they don’t have renter’s insurance, you could bear the brunt of the issue and be forced to take responsibility with your insurance policy. Furthermore, you want to avoid having to pay for issues renters insurance typically covers as this will most likely make higher premiums for the landlord in the future.
4: Help the Tenant Screening Process
Many renters may be unfamiliar with the benefits of renters insurance and might only look at it as an unnecessary cost. When screening tenants, you can weed out any renters who say they won’t pay for renters insurance even after you educate them on the benefits. If they can’t afford renters insurance, it might lead you to question if they can afford to pay the monthly rent on time every month as well.
5: Smoother Relationships with Tenants
Landlord and tenant communication is so important when it comes to running your rental business and being upfront about requiring renter’s insurance in the first place will help you find a tenant who agrees and can afford to pay for it. Having a tenant who is on the same page and well-suited for you and your property will mitigate any conflicts that could occur related to damages. A tenant without insurance is more likely to try to place the blame of any repair or replacement at your feet. A tenant who has renters insurance to cover these costs will be far more willing to take responsibility for items.
Include a Renter’s Insurance Clause in the Lease Agreement
It’s important to remember to include a renters insurance clause in the lease agreement if your state and local laws allow it. A lease agreement is a binding legal document between you and your tenant and will ensure that your renter knows what is required of them when they sign.
Along with including a renters insurance clause in the lease agreement, it’s never a bad idea to check for proof of insurance every year. Especially if you are renewing a lease with a tenant, it’s smart to make sure they are continuing to pay for renter’s insurance – sometimes, renters forget their policy has ended. Confirming that your tenants still have renter’s insurance will give you both peace of mind.
Requiring Renters Insurance
While it is not legal in all places to require renters insurance, in the locations it is legal, it can be a wise decision that will save you money and stress in the long run. Insurance will help keep your home protected from tenant-related accidents, but it will also benefit your tenants greatly as they will be protected from theft, destruction, and loss of property.
The bottom line is that renters insurance helps mitigate risks for every party involved. Plus, renters insurance is reasonably priced, with plans that start as low as $8/month. This means your tenants can choose a plan that fits their needs without causing undue financial hardship. If you have more questions about renters insurance, feel free to reach out to our support team at firstname.lastname@example.org. If you are looking to fill a vacancy, visit our tenant screening services so you can find the best tenant for your property.
DISCLAIMER: TurboTenant, Inc. does not provide legal advice. This material has been prepared for informational purposes only. All users are advised to check all applicable local, state and federal laws and consult legal counsel should questions arise.
This post was updated January 2021.