Tenant refusing to get renters insurance

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Tenant refusing to get renters insurance

Sterling Stroud
Member since 2022 · 8 posts · 6 votes

Hello, 

So a potential renter of mine is insistent that they do not need renters insurance even though I have told them how cheap it is and that it is highly recommended. Renters insurance is not required by law in Virginia which is where I am located. I understand that they would like to save money, but I am wanting to protect myself as well as their belongings and person. Any advice on what I should or could do? 

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Kim Meredith HamptonBusiness Member
Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
3y

Then I guess he needs to go find another place to rent! Make sure you let ALL prospective renters know that this is part of your lease agreement, no exceptions. In addition, make sure that the renters insurance adds you as additionally insured or additional interest, this way you get notified if they try and cancel the policy

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y
    Quote from @Sterling Stroud:

    Hello, 

    So a potential renter of mine is insistent that they do not need renters insurance even though I have told them how cheap it is and that it is highly recommended. Renters insurance is not required by law in Virginia which is where I am located. I understand that they would like to save money, but I am wanting to protect myself as well as their belongings and person. Any advice on what I should or could do? 

    Make it a requirement in your lease to all your tenants before they can get keys to move in.
    15Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    3y

    Then I guess he needs to go find another place to rent! Make sure you let ALL prospective renters know that this is part of your lease agreement, no exceptions. In addition, make sure that the renters insurance adds you as additionally insured or additional interest, this way you get notified if they try and cancel the policy

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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 

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  • Adam Bartling
    Lender · Rosenberg, TX · Member since 2022 · 286 posts · 130 votes
    3y

    It only covers their items. Send them a letter and let them know that it is recorded and their assets inside your building will not have coverage as they are responsible...

    4Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    If it is in your rental agreement then stick to your guns and make them get it. 

    1Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    3y
    Quote from @Russell Brazil:

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 


     LOL I was thinking the same thing....doesn't affect the landlord.

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  • Bob PaxsonPro Member
    Flipper/Rehabber · Philadelphia · Member since 2019 · 45 posts · 17 votes
    3y

    Just increase the rent the amount of the renters insurance and include it as a bonus to tenant

    2Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    3y
    Quote from @Matthew Crivelli:
    Quote from @Russell Brazil:

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 


     LOL I was thinking the same thing....doesn't affect the landlord.

    When the renter screws up and a claim comes, you can either have it filed under their insurance or your insurance. Filed under theirs, you get paid. Filed under yours, you get paid and your insurance gets canceled and when you find another carrier, your premiums will be much higher for the next 7 years. I'd say that affects the landlord. 
    13Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Greg M.:
    Quote from @Matthew Crivelli:
    Quote from @Russell Brazil:

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 


     LOL I was thinking the same thing....doesn't affect the landlord.

    When the renter screws up and a claim comes, you can either have it filed under their insurance or your insurance. Filed under theirs, you get paid. Filed under yours, you get paid and your insurance gets canceled and when you find another carrier, your premiums will be much higher for the next 7 years. I'd say that affects the landlord. 

     @Greg M. for the win as usual^^^^

    1Reply
  • Scott Crowley
    Investor · IN · Member since 2022 · 61 posts · 54 votes
    3y

    Hey Sterling!

    Based on the way you phrased the situation, it sounds like you do not require renter's insurance, rather, you just strongly recommend.

    Therefore, if this is something important to you (which it sounds like it certainly is), I would recommend adding it into your lease as a requirement moving forward. Even though VA may not require this by law, you certainly have the right to draft your lease in a way that suits your business model and still is fair and reasonable with prospective/current tenants.

    I'm always thinking of things like this, and not having knowledge of any weird tenant rights laws in VA, I would just run it by an attorney to be sure it's legally enforceable. Don't see why not, but I like to be extra safe.

    One last thing: Depending on your insurance carrier, they may actually have in your policy that you are required to have the tenant carry insurance while residing in your property under their terms of coverage. Just something to look into if you're unaware as insurance companies are a business and will not pay out a claim when violating their terms.

    Best of luck!

    4Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    3y
    Quote from @Greg M.:
    Quote from @Matthew Crivelli:
    Quote from @Russell Brazil:

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 


     LOL I was thinking the same thing....doesn't affect the landlord.

    When the renter screws up and a claim comes, you can either have it filed under their insurance or your insurance. Filed under theirs, you get paid. Filed under yours, you get paid and your insurance gets canceled and when you find another carrier, your premiums will be much higher for the next 7 years. I'd say that affects the landlord. 

    Renter insurance only covers what belongs to the tenant...your home wouldn't be covered. You could make a case, if the house malfunctioned, an electrical fire took place for no good reason...the tenant could try and sue BUT you could always put specific language in the lease relieving you of such responsibly, or even make a case that the incident was caused by tenant negligence. I have never heard of a landlord forcing tenant insurance before. 

    @Greg M. Have you made a claim against a tenants renters insurance in the past?  

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    There is a larger point here that people are missing. The Landlord has a rule that a tenant must have insurance. The tenant is refusing. This is about who controls the property.

    It doesn't matter whether we think Renter's insurance has value or not....

    10Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    3y
    Quote from @Matthew Crivelli:

    @Greg M. Have you made a claim against a tenants renters insurance in the past?  

    Renters insurance includes liability coverage, usually a minimum of $100K. When the tenant forgets the pot on the stove and the place burns down or forgets about running a bath and the place floods, their renters insurance will pay out rather than yours. When their guest slips and breaks a leg, their insurance will pay out instead of yours. 

    I'm lucky enough to never have to make a claim against a tenants insurance policy, but I do require it for all my tenants. It's fairly standard in my area.

    10Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    3y
    Quote from @Greg M.:
    Quote from @Matthew Crivelli:

    @Greg M. Have you made a claim against a tenants renters insurance in the past?  

    Renters insurance includes liability coverage, usually a minimum of $100K. When the tenant forgets the pot on the stove and the place burns down or forgets about running a bath and the place floods, their renters insurance will pay out rather than yours. When their guest slips and breaks a leg, their insurance will pay out instead of yours. 

    I'm lucky enough to never have to make a claim against a tenants insurance policy, but I do require it for all my tenants. It's fairly standard in my area.


     Exactly. I don't know what anyone else has, but the renters insurance policies that my renters have cover their damage and negligence to my property, liability for things such as their dog biting someone, as well as their crap if the house burns down. It also gives my insurance company someone to abrogate against if they do damage that I make a claim on my policy. 

    I used to recommend, not require it, but after having two trashed houses in a row where that insurance would have covered my losses, that was the end of that leniency. 

    And as someone else said, too bad if the renter doesn't want to get it. They can find a new place to live.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    3y
    Quote from @Sterling Stroud:

    Hello, 

    So a potential renter of mine is insistent that they do not need renters insurance even though I have told them how cheap it is and that it is highly recommended. Renters insurance is not required by law in Virginia which is where I am located. I understand that they would like to save money, but I am wanting to protect myself as well as their belongings and person. Any advice on what I should or could do? 


     Yes. Kick their asses to the curb and let them save money on the next guy's house.

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  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    3y
    Aloha,

    If you do require Renters insurance, be sure you also require that you/your company be named as additional interest; additional insured; or certificate holder (varies depending on insurance co) so that you receive notification if the policy is cancelled for any reason. Otherwise, they might purchase the policy to lock in the rental, then cancel a month later without your knowledge and get most of their money back for insurance.
    Also, check local law, but here, with condos, we require insurance and have language in the by-laws that authorizes us to purchase the insurance if the resident fails to. I believe you can do the same with renter's insurance, with proper language in your rental agreement.
    5Reply
  • Joshua Massari
    Rental Property Investor · Costa Mesa, CA · Member since 2015 · 53 posts · 23 votes
    3y

    @Matthew Crivelli - doesn’t effect the landlord until the renter gets a dog you don’t know about that bites a neighbor. Then the property owner gets sued. Maybe that’s just a CA thing but it is a very real scenario to be considered.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    It should be in the lease, if they don't want to pay for it move on and screen others

    2Reply
  • Tristin Crum
    Investor · Beaverton, OR · Member since 2020 · 25 posts · 34 votes
    3y
    Quote from @Russell Brazil:

    Who cares? Ive never had a single tenant as far as I know that has had renters insurance. 

    I have used renters insurance as a renter, example, I accidently dropped my gun safe down a flight of stairs while moving and the safe damaged the hardwood floors bad enough that the entire first floor needed new flooring because they couldn't match the floors, my renters insurance covered the damages in full with no deductible. I would have covered it if my renters insurance did not but not all tenants are that honest and in many cases the owner would have been stuck paying to fix the floors.

     Additionally, I know quite a few investors that have had tenants that have had to use it. It is cheap enough that I think all landlords and property managers should require it of renters. It also boosts the liability coverage on the property. 

    2Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    I mean....they don't NEED renters insurance. 

    In my leases I clearly state and I verbally explain to tenants that my home owners policy does NOT cover their belongings. 

    I also give them an example: If the house burns down and you lose all your belongings, my insurance won't cover any of it. I highly advise you get a policy to cover your personal belongings. 

    If they don't want to get it, that's on them. 

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    Wow. A lot of you need to learn what renters insurance covers.

    @JD Martin nailed it. I started requiring renters insurance years ago. I've had multiple kitchen fires completely covered by the Tenant, flooding due to a broken washing machine, flooding from a bathtub left running, and even an expensive bed bug issue.

    @Sterling Stroud if your lease requires it, you need to make a decision whether you want to push it. I can tell you it's hard to justify kicking a tenant out for not buying insurance.

    Recommendation: 

    1. If you require it, you should also require they add you as "additional insured" on the policy. This will cover you under their liability policy and it will ensure you are notified of any changes or cancellations of their policy so it's easy to track.

    2. Consider improving your lease to state that if they failure to maintain renters insurance through the entire term, you are authorized to purchase the insurance on your own and add that charge to their monthly rent. Find an attorney to help you draft the language.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    3y

    I don’t hassle with this. I know there are benefits to it, but I’m dealing with completely broke people that can barely pay rent and have any left over $ to put gas in their car. And this is why they’ll always be renters. Lol

    1Reply
  • Michael Deering
    Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes
    3y

    This person is even under contract and they are telling you they are refusing your requirements. This called a red flag or near miss and you should move on to another canidate.

    4Reply
  • Khalid Bryan
    Real Estate Broker · Fort Lauderdale, FL · Member since 2018 · 196 posts · 191 votes
    3y

    @Sterling Stroud this may be an unpopular opinion but if this is a well qualified tenant and this is the only thing holding you back from moving them in, I’d just tighten up your homeowners insurance policy and make it clear you aren’t responsible for the tenants belongings. Good tenants aren’t THAT common and everything’s negotiable in real estate.

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @John Morgan:

    I don’t hassle with this. I know there are benefits to it, but I’m dealing with completely broke people that can barely pay rent and have any left over $ to put gas in their car. And this is why they’ll always be renters. Lol


     I wouldn't want that class of tenant. Just one month away from needing to evict them, too much stress and hassle.

    1Reply
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