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Should I require my tenant to have renter’s insurance?

Many landlords do not require their tenants to have their own renter’s insurance. While not necessarily required renter’s insurance benefits both the landlord and tenant and it is a good idea to require all tenants to have it as a term in the lease agreement. Why?

Many tenants assume that their landlord’s policy will cover their personal property if it is damaged destroyed or stolen. This is not the case however. The only items that are covered under the landlord’s policy are items that the landlord personally owns like appliances or furniture (in a furnished apartment). The best way for tenants to protect their own possessions is to have renter’s insurance. It is inexpensive (usually under $20 a month) and can be paired with an existing car insurance policy for a further discounted rate.

What are some of the benefits of renter’s insurance? For the landlord there is an additional layer of liability protection. If someone is hurt on the rental property the tenant’s policy would respond first. It also helps reduce the possibility of a lawsuit and helps screen potential tenants (it’s a pretty big red flag if they won’t insure themselves).

Renter’s insurance offers liability coverage.

Liability coverage protects both the tenants and the landlord in the event they are found at-fault for damage to another person the apartment or the building. For instance if the tenant is found to be at fault for a fire that damages the building or the next-door neighbour’s property the tenant would be covered by their renter’s insurance.

Similarly if someone slips and falls in the apartment the tenant could be held financially responsible for the cost of the injured person’s pain suffering and medical bills. With renter’s insurance the tenant and landlord could rely on the insurer to carry the cost in such a situation.

Renter’s insurance reduces the possibility of a lawsuit against the landlord.

The most beneficial reason to require tenants to have renter’s insurance is because it helps the landlord in case of injuries.Quite often when an uninsured tenant suffers damage to their belongings they try to make a claim against the landlord – just or not. With their own policy the renters will have their belongings covered (as long as it’s covered by their policy).

Renter’s insurance helps screen potential tenants.

While that may not be its main purpose requiring rental insurance can also be a useful screening tool. If a landlord requires a potential tenant to have it and they complain about not being able to afford it that could be an indication that the potential tenant can’t afford the rent in the first place.  Renter’s insurance is so affordable that this should not be a difficult requirement to meet.

Make sure you request proof of insurance (at least annually) as some people will purchase a policy and cancel it – or  not get one at all.

Renter’s insurance helps the tenants.

Having rental insurance also protects the tenant in the event of damage to the tenant’s own personal possessions. And lastly if the renter can’t live in their home due to repairs after a claim and have to get temporary accommodation renters insurance would help with these additional costs.

Some closing thoughts…

Rental insurance is beneficial from both the landlord and tenant’s perspectives. It reduces stress for both parties and gives both the renter and the landlord peace of mind. This results in a better landlord/tenant relationship even in the event something bad happens.