Most tenants have no idea how important it is to carry renter’s insurance. That’s why it is so
essential to educate them about the benefits of having such insurance. It is also a good idea for a
landlord to include a clause in the lease that requires the tenant to carry renter’s insurance. Why?
Because it’s a best practice for a landlord to require tenants to buy renter’s insurance, which
transfers risk away from the owner of the rental unit to the tenant.
What is renter’s insurance?
Renter’s insurance is a policy tenants can carry that gives them coverage if their personal
property is stolen from their rental unit or damaged. It also protects them from being liable if a
guest is injured in their home.
Keep in mind that renter’s insurance will only cover tenant’s stolen property if the landlord
meets the locale’s minimum security measures. So, for example, doors and windows must be
locked and the area must be properly and safely illuminated to help prevent theft. Generally
speaking, though, unless negligence can be proven, landlords are almost never held responsible
when a tenant’s property is damaged or stolen. More than anything else, a renter’s insurance
policy helps protect the renter.
Renter’s insurance is cheap – usually about $15.00 – $20.00 per month – and most major
insurance companies offer it. Recommending it or including renter’s insurance as a requirement
of a lease benefits landlords both directly and indirectly.
What does renter’s insurance cover?
Renter’s insurance covers a significant range of damages that include the following:
- Personal property: This includes everything from art and jewelry to clothing and
computers. Personal property is protected from many types of damage that include
weather events, fires, explosions, riots, theft, vandalism, smoke, and more.
- Loss of use: If a property is damaged from, say, fire or flood, the tenant must find
alternate living arrangements until the rental property can be repaired. Renter’s insurance
will cover the cost of that alternate housing.
- Liability: If a tenant causes damage to a property through, again, fire or flood, chances
are that the costs to repair a rental unit will be higher than the security deposit. Assuming
the incident is covered, renter’s insurance will pay for the repairs. In addition, if someone
trips and falls because of a tenant’s cluttered floor, or suffers injury when a tenant’s dog
bites them, renter’s insurance will cover the damages, including any medical expenses.
- Third-party property damage: This one is more common than you might think. For example, if a tenant lets the bathtub overflow and causes damage to the unit below, or makes an unapproved renovation that causes damage to the floor, ceiling, or wall, renter’s insurance will most likely cover it.
Renter’s insurance benefits both the tenant and landlord. Many tenants are not even aware that
they can enjoy the advantages of such protection. Landlords should stress the value and
importance of renter’s insurance and make sure their tenants carry it. Tenants can purchase
renter’s insurance from their auto insurance carrier as part of a bundle, from any major insurance
carrier such as State Farm, Allstate, GEICO, Progressive etc., or via a trusted insurance agency.