Tenant Ignoring Renters Insurance Requirement – What’s My Next Step?
Realtor · Oceanside, CA · Member since 2020 · 43 posts · 20 votes
Tenant Ignoring Renters Insurance Requirement – What’s My Next Step?
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Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1yYour choice:
1) Because of your failure to prove you have obtained renters insurance upon moving in this is your 5-7-9 (how ever many days required in your market) notice to cure the problem or leave the premises at the end of the month.
.
2) Because you have failed to provide prof of renters insurance upon move in a policy will be provided for you starting March 1st through insurance company X at a cost of $xxx.xx. A copy of the policy will be provided to you. This cost will be due March 1st and deducted from any payments before any rent is applied. This may result in late fees and eventual eviction if not cured within the legally provided time.
21 Replies
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes1y
Your choice:
1) Because of your failure to prove you have obtained renters insurance upon moving in this is your 5-7-9 (how ever many days required in your market) notice to cure the problem or leave the premises at the end of the month.
.
2) Because you have failed to provide prof of renters insurance upon move in a policy will be provided for you starting March 1st through insurance company X at a cost of $xxx.xx. A copy of the policy will be provided to you. This cost will be due March 1st and deducted from any payments before any rent is applied. This may result in late fees and eventual eviction if not cured within the legally provided time. - Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes1y
Your answer will most likely lie in your lease. Others' experiences might not matter as much as their leases are different. What options does your lease give you?
Most mortgages say the lender has the right to buy homeowner's insurance for you if you don't prove you have it. Does your lease allow you to buy renter's insurance and charge the tenant?
My leases say I can charge my tenants anytime I do something or pay for something they are responsible for. I haven't had a renter's insurance issue, but have done this for maintenance items. You might be able to go this route if your lease says something to that effect.
Without lease support, you can write them a letter informing them they are in violation of the terms of their lease due to the lack of proof of insurance. Tell them they have until [Date] to show you proof of insurance or move out of the property. You can add that you will buy the insurance for them and charge them if they remain in the property after [Date]. Alternatively, you can tell them you will charge their security deposit for it, but that becomes a charge against your security for the property.
You should consider whether you really want them out of the property with regards to the above paragraph. You can drop the move-out part and just go with the buy-for part if you don't want to push them out. Otherwise, you can go the other way if you want them out. If it were me with my tenants, I would go with the buy-for option and just charge them.
Next time, update your lease and don't let them have the keys until they show you proof of insurance.
- Rental Property Investor · Philadelphia, PA · Member since 2021 · 772 posts · 499 votes1y
@Erick Armando Gonzalez - I like Bill's suggestions. Either one would hopefully "light a fire" under the tenant to get it done. I also have a clause in my lease that states what will happen if proof of insurance is not provided - which is similar to what Bill indicated above. However, the most effective method is to simply tell the tenant that they'll need to provide proof of insurance prior to or on the day 1 of the start of the lease, otherwise the keys will not be provided to them. I had a fire in one of my houses recently and the tenant was very glad the had insurance! Also, be sure to have your LLC as an "additional insured" on their insurance policy as well. You're not a beneficiary of the policy, but you get notified when a policy is cancelled or renewed - which also helps!
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes1y
You notify them you will be purchasing the policy for them and doing so with their security deposit money, if state law allows it.
District Invest Group546 Reviews - Property Manager · Portland, OR · Member since 2023 · 40 posts · 20 votes1y
It depends on your lease terms. But I personally would issue a lease violation if they weren't responding to me. I also agree with others, if your lease and jurisdiction allow it, you could purchase a policy on their behalf and bill it back to them. I would caution against using security deposit funds during a tenancy if you can avoid it; you want all the funds available at move-out in case you need them.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
There's no point in having a rule if you don't know how to enforce it.
Example:
Requirement to Maintain Renters Insurance:
The Tenant acknowledges that the Landlord’s insurance does not cover the Tenant’s personal belongings, injuries, or other losses. Tenant waives any claims against the Landlord for loss, damage, or theft of personal property, regardless of the cause. The Tenant agrees to maintain an active renters insurance policy for the duration of the lease term and any renewal periods. The policy must provide a minimum of $[amount] in liability coverage. The insurance policy must name [Landlord's Name or Property Management Company] as Additional Interest, ensuring the Landlord receives notice of any policy changes or cancellations. Proof of coverage must be provided to the Landlord prior to move-in and upon each policy renewal. If the Tenant fails to obtain or maintain renters insurance as required, the Landlord may purchase a force-placed liability insurance policy to protect the Landlord’s interests. This policy will not cover the Tenant’s personal belongings or liability but will solely protect the rental property. Tenant shall be charged $[amount] to cover the cost of this force-placed insurance.The other lesson is that you should never hand over keys until you have proof the Tenant has met all requirements. This includes all charges paid, utility accounts set up, renter's insurance established, lease signed, etc.
The DIY Landlord Book4.7248 Reviews - Real Estate Agent · Cleveland OH · Member since 2015 · 213 posts · 275 votes1y
I explain renters insurance during the tenant selection process. I explain that renters insurance protects them. The landlord is protected by their property insurance but it does not protect a tenant. I tell them the story of my neighbor whose pipes burst on the 3rd floor during a bad cold snap. The water fell 3 floors, when I observed the incident my neighbor was attempting the sweep water out the back door. The house was made inhabitable. My neighbor who owned the property and lived in the 2nd floor rebuilt. The young couple living in the 1st floor, lost everything and was homeless at Christmas. They had no renters insurance. My version of the renter's parable.
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes1y
Not only does the tenant need to provide proof of Renter's Insurance BEFORE moving in, it must include "Landlord as additionally insured" coverage. Since the tenant is in, what does your lease state? If it is a lease covenant, send them a violation letter by US Mail with proof of delivery required and/or post the notice on the door in a sealed envelope with their name on it, taking a photo to prove delivery. Know this: the #1 reason why landlords fail according to the American Apartment Owners' Association is failure to manage to the lease. If you fail to enforce, that's on you - as are the consequences. And, you don't want to rely on a security deposit offset/fight should damages be sustained. Enforce the lease; it's a cheap date through their auto insurance company...and get proof of it.
- 1yOwen RosenBusiness MemberProfessional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes
Quote from @Patricia Steiner:
Not only does the tenant need to provide proof of Renter's Insurance BEFORE moving in, it must include "Landlord as additionally insured" coverage. Since the tenant is in, what does your lease state? If it is a lease covenant, send them a violation letter by US Mail with proof of delivery required and/or post the notice on the door in a sealed envelope with their name on it, taking a photo to prove delivery. Know this: the #1 reason why landlords fail according to the American Apartment Owners' Association is failure to manage to the lease. If you fail to enforce, that's on you - as are the consequences. And, you don't want to rely on a security deposit offset/fight should damages be sustained. Enforce the lease; it's a cheap date through their auto insurance company...and get proof of it.
Landlord should be "additional interest" not "additional insured"
Royal Oath Insurance Group4.9203 Reviews - Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes1y
No...here's why it is 'additionally insured:"
"An additional insured is anyone who enjoys the benefits of the insurance policy that is not the primary policyholder. In general, an additional insured is added when the additional party carries some of the risk related to the insured property."
Internet searches are abundant; here's one:
https://www.proinsgrp.com/should-i-add-my-landlord-to-my-ren... - 1yOwen RosenBusiness MemberProfessional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes
Quote from @Patricia Steiner:
No...here's why it is 'additionally insured:"
"An additional insured is anyone who enjoys the benefits of the insurance policy that is not the primary policyholder. In general, an additional insured is added when the additional party carries some of the risk related to the insured property."
Internet searches are abundant; here's one:
https://www.proinsgrp.com/should-i-add-my-landlord-to-my-ren...@Patricia Steiner, it's not advisable. Linking to a blog on a random insurance agency is not useful.
The landlord has no interest in the property being insured which are the tenants belongings. A tenant has no reason to provide liability coverage to the landlord and the rights given to an additional insured. This can complicate claims payments for the named insured/tenant. It could complicate coverage in the event of a lawsuit as well.
The landlord absolutely can ask the tenant to be named as an additional interest and this gives peace of mind that in the event of a claim the tenant would at least have potentially recoverable funds.
Does this mean that landlords are never added as additional insureds? No, it doesn't mean that. It means that in my 15+ years of experience as an insurance agent this is the correct way to do it. For references from actual insurance companies:
https://www.progressive.com/answers/interested-party-renters...https://www.lemonade.com/renters/explained/interested-party/...
Royal Oath Insurance Group4.9203 Reviews - Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes1y
@Erick Armando Gonzalez I would try to meet with them personally and see if they will comply. If they keep dodging you, send a formal written notice to them.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Owen Rosen the links you shared pretty much only state a tenant shouldn't have to supply liability coverage to their landlord.
Of course they will say this as the provider does NOT want the extra liability of covering additional parties!
The landlord though, should WANT all the coverage they can get!
If a tenant causes a claim, why should the landlord's insurance pay - possibly resulting in an increase in premium or even a cancellation of the policy?
In a personal injury claim caused by the tenant, who's the plaintiff's attorney going to sue?
EVERYONE including the landlord!
So, again, why wouldn't the landlord want additional coverage from the tenant's policy?
Logical Property Management4.9451 Reviews - Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes1y
Not interested in debating this topic with you. I own 40 properties, have a family full of developers/attorneys aka all things annoying, and I am a former senior wealth manager. It isn't a random search as you stated but experience and professional counsel.
You do you...let's not waste each others' time with this further.
- 1yOwen RosenBusiness MemberProfessional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes
Quote from @Drew Sygit:
@Owen Rosen the links you shared pretty much only state a tenant shouldn't have to supply liability coverage to their landlord.
Of course they will say this as the provider does NOT want the extra liability of covering additional parties!
The landlord though, should WANT all the coverage they can get!
If a tenant causes a claim, why should the landlord's insurance pay - possibly resulting in an increase in premium or even a cancellation of the policy?
In a personal injury claim caused by the tenant, who's the plaintiff's attorney going to sue?
EVERYONE including the landlord!
So, again, why wouldn't the landlord want additional coverage from the tenant's policy?
Drew, that's not what the links say. It's also not what I'm saying. I actually write the policies and the insurance companies create the contracts and provide the coverage. Renters insurance is designed to protect the renter. Full stop.
Here's another link:
https://www.thezebra.com/auto-insurance/insurance-guide/addi...
That said, let's address your scenario. You think that in the event of a liability lawsuit, a landlord will be able to avoid notice of loss to their insurance by defending themselves with the coverage provided by the tenants renters insurance? There is basically zero chance of that occurring.
The first thing that the renters insurance would do is contact the landlord insurance and they would step in on the matter and/or they would subrogate any costs to the landlord's liability insurance.
There is risk for the landlord in being added as an insured though - specifically if the tenant and landlord are opposed in a matter. It turns black and white into gray and could jeopardize both parties ability to subrogate against the other.
Royal Oath Insurance Group4.9203 Reviews - Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
We've gotten off topic a bit but now I'm unclear on who is correct about Additional Insured vs. Additional Interest...
My property manager is on my landlord insurance policy as Additional Insured, and my tenants add me as Additional Interest. My understanding is this is the correct way to do it for these reasons: Renter's insurance is for renters, landlord insurance is for landlords. We each have our own coverage for our own property and our own liability, separately. Typically people only get insurance on things that they own, or liability insurance for their own protection.
It makes sense for a PM to be Additional Insured on a landlord policy because they can't get insurance coverage on a property they don't own. It makes sense for house mates, spouses etc. to be Additional Insured on a renter's Insurance policy if they also live there and keep their stuff there (although I think anyone on the lease is typically covered anyway). But I don't see why I would be Additional Insured on my tenants renters insurance when it is for their property and their liability, not mine.
If a situation arises where landlord and tenant end up suing each other or both being named in a lawsuit, and we're on the same insurance policy together, that seems to create more problems than it solves. This structure probably just means more grey area which means more legal fees and perhaps less chance of either of us being covered at all. In some places I think courts prevent people on the same insurance policy from suing each other, and some insurance policies exclude two people on the same policy from suing each other. So this would actually work against the intended purpose. Additionally I think the coverage amount will be limited in some scenarios because by being on the tenant's policy, the landlord is no longer considered a 3rd party. They could get a portion of what the tenant gets in coverage but wouldn't get any additional coverage as a 3rd party. So it's not really "extra coverage" for a landlord, but rather a setup that can potentially create problems and less coverage. What if only the tenant is sued, or only the landlord? Probably better for the other party to not be on the other's policy in that case. What if only the tenant's property is damaged? No need for landlord to be involved in that claim. Renters insurance is so cheap because it is not connected to the property and the landlord after all, right? It's renter's insurance, not landlords.
It seems like keeping separate insurance policies is the preferred way to go while being added as Additional Interest on the tenants renter's insurance policy in order to be notified of any changes to their policy.
What is the argument for a landlord being added as Additional Insured on a tenant's renter's insurance as opposed to Additional Interest?
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes1y
Quote from @Owen Rosen:
What?
The tenant has two types of coverage: liability and personal property. The landlord has no interest in the personal property coverage, but they absolutely have an interest in the liability side.
When the landlord is listed on the policy as "additional insured" it extends some coverage from the tenant's policy to the landlord in case of certain liabilities arising from the tenant's use of the property, like accidents or damages caused by the tenant's negligence. As a property manager, I also require landlords place me on their policy as "additional insured" and it extends some protections over to me.The DIY Landlord Book4.7248 Reviews - 1yAdam BartomeoBusiness MemberReal Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
You will want to check your laws first, it is illegal in FL to require renters insurance. After that you should post a 7 day notice or whatever notice your state requires.
Bartomeo Property Management4.7150 Reviews - 1yOwen RosenBusiness MemberProfessional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes
Quote from @Steve K.:
We've gotten off topic a bit but now I'm unclear on who is correct about Additional Insured vs. Additional Interest...
My property manager is on my landlord insurance policy as Additional Insured, and my tenants add me as Additional Interest. My understanding is this is the correct way to do it for these reasons: Renter's insurance is for renters, landlord insurance is for landlords. We each have our own coverage for our own property and our own liability, separately. Typically people only get insurance on things that they own, or liability insurance for their own protection.
It makes sense for a PM to be Additional Insured on a landlord policy because they can't get insurance coverage on a property they don't own. It makes sense for house mates, spouses etc. to be Additional Insured on a renter's Insurance policy if they also live there and keep their stuff there (although I think anyone on the lease is typically covered anyway). But I don't see why I would be Additional Insured on my tenants renters insurance when it is for their property and their liability, not mine.
If a situation arises where landlord and tenant end up suing each other or both being named in a lawsuit, and we're on the same insurance policy together, that seems to create more problems than it solves. This structure probably just means more grey area which means more legal fees and perhaps less chance of either of us being covered at all. In some places I think courts prevent people on the same insurance policy from suing each other, and some insurance policies exclude two people on the same policy from suing each other. So this would actually work against the intended purpose. Additionally I think the coverage amount will be limited in some scenarios because by being on the tenant's policy, the landlord is no longer considered a 3rd party. They could get a portion of what the tenant gets in coverage but wouldn't get any additional coverage as a 3rd party. So it's not really "extra coverage" for a landlord, but rather a setup that can potentially create problems and less coverage. What if only the tenant is sued, or only the landlord? Probably better for the other party to not be on the other's policy in that case. What if only the tenant's property is damaged? No need for landlord to be involved in that claim. Renters insurance is so cheap because it is not connected to the property and the landlord after all, right? It's renter's insurance, not landlords.
It seems like keeping separate insurance policies is the preferred way to go while being added as Additional Interest on the tenants renter's insurance policy in order to be notified of any changes to their policy.
What is the argument for a landlord being added as Additional Insured on a tenant's renter's insurance as opposed to Additional Interest?
bingo
Royal Oath Insurance Group4.9203 Reviews - Real Estate Agent · St Petersburg, FL · Member since 2019 · 320 posts · 182 votes1y
Quote from @Adam Bartomeo:
You will want to check your laws first, it is illegal in FL to require renters insurance. After that you should post a 7 day notice or whatever notice your state requires.
It's "illegal" in FL to require renters insurance?
Are you certain of this?
State statues do not require tenants have renter's insurance, however I have yet to ever find where it is banned, illegal or otherwise for PMCs or landlords to require it of tenants.
- Real Estate Agent · St Petersburg, FL · Member since 2019 · 320 posts · 182 votes1y
This thread shows there is a need for a larger guided discussion on best practices as it relates to (renters) insurance.
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