Tenant Vs. Landlord
Thursday, June 17
This is a very common question asked by tenants and landlords. Most people who are renting their home from someone else my have little or no experience with insurance or may have never needed to make a claim so they are unaware as to what is covered by a landlord insurance policy or a renters insurance policy. Hopefully we can put together some information that can be helpful to the tenant and the landlord when thinking about what insurance to buy.
Landlord Insurance
A landlord insurance policy is designed to insure the interests of the landlord. The landlord owns the building and receives rent from a tenant if the property is occupied. In the event of a fire the landlord can suffer losses to include damage to the building, damage to other structures like a garage or shed, loss of rent if the tenant can’t live in the property due to a covered loss, or even a liability claim should someone get hurt on the property and the landlord is found to be negligent. Now lets break down the coverages a little more to make it a little more clear.
Building or Fire Insurance. A basic policy will insure the building for damages resulting from a fire. The fire can be the fault of the landlord, the insured, or something else entirely. Other hazards that may cause a loss are wind, hail, vandalism, malicious mischief, and leaky pipes. Other hazards are not automatically covered on a basic fire policy and may have to be purchased in addition to the fire coverage. If the loss is the result of the tenants negligence the landlord may be covered as long as the policy is written as a tenant occupied property and the cause of loss was a covered peril. Perils can be fire, wind, hail, VM&M, or leaky pipes.
Other Structures. This coverage is for any structure owned by the landlord that is not attached to the house. A detached garage, shed, or fence would be an example of an other structure. All the hazards or covered losses would be the same as the building coverage. Other structures is not always an automatic coverage and may have to be purchased separately on the policy.
Landlords Contents. This would cover contents of the landlord to include a stove, dishwasher, or other appliances or property owned by the landlord and left for the use of the tenant. This property is covered on the contents portion of the landlords policy up to the specified limit. Not always an automatic coverage and may have to be purchased separately on the policy.
Loss of Rent. This is often a misunderstood coverage. Loss of rents provides coverage for the landlord if the property is damaged due to a covered loss and the tenant can not live in the property until it is repaired. The loss of rents pays the landlord lost rents that they can not collected from the tenant because the house is unlivable. The coverage does not provide housing or living expenses for the tenant, only the rents the landlord can not collect from the tenant while the property is being repaired. Coverage for the tenant to provide housing is covered under a tenant or renters insurance policy which we will discuss later in this post.
Medical and Liability Coverage.These are actually two different coverages and are usually tied together. Medical coverage can be thought of as first aid coverage. Provides an injured person with basic medical coverage to the amount stated in the policy which usually starts at $500. It could be more, depends on the policy amount. Liability insurance would be for more extensive medical treatment and/or pain and suffering. This is the amount a person, either the tenant or a guest, could sue the landlord for injuries caused by the property of the landlord. Common lawsuits brought against landlords are for poor maintenance of the sidewalk, driveway, porch, or the home. Cracks, missing rails, or other property hazards can result in a liability claim to the landlord. Even if the person was a guest of the tenant, the landlord can still be responsible for their injuries.
Many landlord insurance policies offer other coverages also. Additional policies may have to be purchased if you need earthquake, flood, or mine coverage. These are federal programs that are sold by insurance companies but are not usually covered under a landlord insurance policy.
Renters Insurance or Tenant Insurance.
A renters insurance policy is a policy purchased by the tenant and is separate from the landlords insurance policy. The renters insurance policy covers the contents owned by the tenant, loss of use due to a covered loss, tenants fire legal liability limit which actually provides coverage for the landlord, and liability coverage should someone be hurt or injured due to the fault or neglect of the tenant. A typical renters policy will cost about $10 to $50 a month depending on the company and the coverages offered. Now lets break these down a little more.
Contents. This is coverage is for a tenant should they lose the things they own due to a covered loss. If the home catches on fire and the tenant has damage to their clothes, furniture, and other possessions, the policy would cover the loss up to the amount of coverage. A basic renters policy will usually cover $10,000 of the tenants possessions but can be more or less.
Loss of use. This is almost like the loss of rents coverage except the tenant is the person who receives the benefit. If a property is unlivable due to a covered loss, the insurance company will pay for the tenant to live somewhere else like a hotel until the property is repaired or the coverage runs out. Most policies state how much or how long they will pay for alternate housing while the property is being repaired. To summarize the difference, loss of rents is on the landlords policy and pays the landlord for lost rents, loss of use is on the renters policy and provides housing or money to the tenant.
Fire Legal Liability Limit. This is coverage that provides money to the landlord should the tenant be responsible for the claim. If a tenant is smoking in the home and causes a house fire resulting in $25,000 in damage, the landlord can sue the tenant for the damage to the property because it was the tenants fault. The insurance company for the tenant would represent the tenant and pay for the damages to the landlord if it is a covered peril such as fire. In most rental contracts a landlord can charge a tenant for damages to the property and they collect a security deposit to help offset a small amount of damage. So fire legal liability limit coverage is on a tenants policy and pays the landlord if the tenant is responsible for the damage and the damage is a covered peril. The policy probably will not cover intentional damage to the property as an example. Most landlords require tenants to have a renters insurance policy for this exact reason.
Liability Insurance. This works the same way as it does for the landlord but since the tenant is not usually responsible for the general maintenance of the property this would cover negligence of the tenant like a trip hazard such as a rake left in the yard.
We hope you found this information to be useful. We have an outside blog at http://blog.mylandlordinsurance.com if you find our thoughts interesting. This is not an all inclusive list and does not represent what an insurance policy will or will not cover. These are general terms and should only be used as an educational guide. Always consult your agent and read your policy to make sure you have the coverage you need and want.
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over 1 year ago
This is more of a questiion- can the landlord tell me to pay insurance because someone moved in with me to help me while i was ill?
Donald Stevens Reply
9 months ago
It is very possible that your landlord does not cover business liability or workmans compensation for a home health aide to visit you at your home. Ask the landlord if the health aide can provide proof of insurance and list the landlord to be listed as an additional insured for liability and workers compensation. If they don't have insurance then in most states you the employer are responsible for any injury that occurs to the employee while on the premises. You are acting as an employer while they are working for you and can be sued for a workers compensation injury or any trip and fall or other liability injury. It happens a lot to homeowners that hire gardners, nannys/babysitters, and other household help. If they dont have their own workers comp policy and they are working for you, you can and will be responsible for any injuries or liability to the individual. Some homeowners insurance companies do offer coverage for hired help but it is a rare coverage and is only offered by a very few insurance companies. In this case it does not seem unreasonable to me as an insurance agent for your landlord to be concerned with his liability. Good luck.
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about 1 year ago
My landlord wants me to pay their insurance policy, is this legal? I've always purchased my own renters insurance and am not sure why i would be paying their policy
Donald Stevens Reply
9 months ago
Most landlords from my experience include all the expenses in the amount of rent that you pay but I dont think it is required to be that way. Our company has several leases but they are commercial and I always try to avoid any triple net leases. A triple net lease will hold you responsible for the cost of taxes, insurance, and maintanence in addition to your monthly rent. I'm not a residential landlord but I would have to think it would need to be spelled out in the lease like it does with our commercial leases. Best to contact an attorney for an exact answer.
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about 1 year ago
can my lanlord make me pay for sewer if owner occupied lives next door.
Donald Stevens Reply
9 months ago
This is more of a contract law question in regards to your rental agreement with the landlord. Sorry I'm not an attorney so I can't say for sure but you may want to try and get a free consultation with a local attorney and see what your rights are for this particular situation.
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10 months ago
I am a licensed real estate broker in California (10+ years) and am also a property investor/property manager for more than 15 rentable units plus others for clients. I have interviewed 1/2 dozen insurance agents (big ones) and searched numerous articles regarding renter's insurance (esp how it impacts landlord) and I must say your's was the most accurate and original. I was ready to cancel the order for numerous rental policies until reading your article. Every other article focuses on protecting the loss of personal belongings of tenants NOT the liability for their/guests actions. Most important point is EVEN THOUGH my landlord policy covers damage to my property caused by tenant, w/o a tenant policy in place, tenant would never have enough to pay damages, and therefore my insurance policy would come into play as would a) high deductible b) insurance claims history degradation. Excellent article!! Thanks!
Donald Stevens Reply
9 months ago
Your welcome. Its because of so many great investors coming out of California that we decided to purchase 2 insurance agencies in the state and we are currently working on our Franchise oppurtunity for others in California and the surrounding states looking to duplicate our success so far. Hopefully you enjoy the other articles I will be writing shortly and thank you for the positive feedback. Its good to know someone is reading my posts and finding value in them and that information isnt just sitting on the internet not getting used. Thanks again Terry.
Joshua Dorkin Reply
9 months ago
@Donald Stevens - You've got four people asking you questions about insurance in response to your blog article, but you have yet to answer any of them. I bet you'd find our site to be far more effective if you were more responsive to people's questions of you. Good luck!
Donald Stevens Reply
9 months ago
I wrote this in more of an article format Josh. I wasn't really expecting to answer questions so I wasnt following my post. I hoped the information would be one piece of many to help investors make educated decisions. I will gladly try to answer these questions and any others posted, however because insurance is highly regulated and varies from state to state it can sometimes be difficult to give an exact answer. Thanks for your website Josh.
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8 months ago
If my tenant gets hurt from having a water fight, slipping and breaking the window and gets stitches, is it my responsibility as landlord to pay for a) their medical costs and b) the window repairs? To that end, is the landlord responsible for cost of repairs should the damages be caused soley by the tenants own fault?
Donald Stevens Reply
8 months ago
If you have a landlord insurance policy and it has liability coverage, you can call your insurance company and file a claim. The claims adjuster will discuss your coverages then if it is a covered loss they will hire an attorney to defend you and pay out any settlement on your behalf (minus deductible of course). Thats why we have insurance, for the unforseen.
As far as if you are responsible for your tenant and their injuries I would say a court would have to review all statements and evidence to determine who is or is not at fault.
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8 months ago
A tree fell in the backyard of our rental property crushing our shed & our tenant's contents during a hurricane. I did not contact the insurance company because I assumed the damage would not be high enough to file a claim. The tree and crushed shed are being removed today. However, my tenant contacted me today asking 1.) what insurance coverage would be available for his contents and 2.) what are our plans are for a replacement shed. Mostly, I need to know what his contents are covered by if at all. I'm not sure what my obligation is to providing a new shed, but that's not so much an insurance question (I think.) My guess is that the renter's contents would not be covered as they would need to be covered under a renters insurance policy.
Donald Stevens Reply
8 months ago
Your tenants personal property should be covered by a renters insurance policy. Your landlord policy does not cover tenants property because you do not have an insurable interest in that property since you do not own that property. Many landlords require tenants as part of the leasing agreement to carry renters insurance to protect the tenants personal property and protect the landlord from liability claims caused by the tenants neglect. Also many renters insurance policies will have fire legal liability which means if your property is burned down due to the fault of the tenant, your insurance company can collect up to $100k from the tenants insurance policy for damages caused to your property. Renters insurance can also give the tenant loss us use coverage that will pay for them to live somewhere else should the home become damaged and unlivable.
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8 months ago
Thanks for the info!!!
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7 months ago
I have a tenant who called me in because there was damage to the door in the back of the house. When I inspected the damage, I noticed that the strike plate was completely "torn" away from the jamb, with the exception of the top screw holding it in place. I asked how it happened and the tenant told me he noticed that there was strong air pressure that would result in the door slamming and that he should have place something in front of the door. I'm guessing this happened more than a few times. Can I charge the tenant to have these repairs made? I think the entire door jamb may have to be replaced.
Donald Stevens Reply
7 months ago
Because this isn't an insurance related question I am not sure how to answer. What you are allowed to charge a tenant is usually specified in your contract with the tenant and the local tenant rights laws "fair housing act". You could contact the friend of the court or an attorney with knowledge of local laws to help you decide who is responsible for the maintanence of the door. Good luck.